Starbucks' 'Order Ahead' Hits 10% of Transactions in Some Stores

Starbucks' new order ahead mobile feature is off to a fast start, handling more than six million transactions per month only three months after the feature's launch.

It was a bright spot in a mixed quarterly earnings report for the coffee chain.

"In many of our busiest stores where morning peak demand is high, Mobile Order & Pay exceeds 10% of total transactions," said Kevin Johnson, President and COO of Starbucks, during Thursday evening's earnings conference call.

Starbucks has long been ahead of the curve in convincing consumers to use its mobile app to make payments and access gift cards and loyalty. In December, 22% of U.S. transactions were paid using Starbucks mobile apps, and growth has continued into January, Johnson said. Starbucks began supporting Apple Pay in the fall, and added drive-through video screens to allow consumers to speak with store staff.

"This was another quarter of solid progress. We continued to see broad customer acceptance and adoption of our mobile platform and the Starbucks mobile app has emerged as an evolving platform and a profit driver of its own," Johnson said.

The Seattle-based coffee chain is testing mobile order and delivery in Seattle and New York, and the company has invested in technology to drive personalized marketing offers. Starbucks also hopes to build off of its streaming music partnership with Spotify to seek other digital media partnership that fit its brand, Johnson said.

For the quarter ending Dec. 27, Starbucks reported earnings of 46 cents per share on revenue of $5.39 billion. That was better than Wall Street analysts' expectations of 45 cents per share, but Starbucks adjusted its second quarter outlook to 38 to 39 cents per share, below analysts expectations of 40 cents. Sales in the Asia Pacific region in particular fell short of analysts' forecast.

During the conference call, Starbucks CEO Howard Schultz expressed confidence in China despite economic volatility and said Starbucks was on track to expand to 3,400 stores by 2019 from its current 2,000 locations.

Starbucks in the past quarter introduced social gifting in China through Alibaba's T-Mobile site, and is enabling consumers in China to use Tmall to send gift cards. The Chinese government has also permitted Starbucks to offer a stored value card in China, Schultz said.

"We are taking a long-term view on how we build our business in China," Schultz said.