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Starbucks launching mobile ordering, will add beer, wine and snacks

Dec 04, 2014

By Lisa Baertlein

Starbucks Corp, aiming to give cooling U.S. traffic a jolt, on Thursday announced it will add beer, wine, and evening snacks to thousands of domestic cafes, widen lunch offerings and roll out mobile ordering.

Such efforts are part of the world's biggest coffee chain's plan to broaden its appeal as a destination with consumers who are spending more time shopping online rather than in malls and Main Street stores.

The company, which is hosting its biennial investor meeting in Seattle, said it would lay out its five-year plans to double U.S. food revenue to over $4 billion by expanding food choices, particularly during lunch hours.

Starbucks (sbux) plans to reap about $1 billion in new sales from the addition of evening menus, including beer, wine and food, at nearly 3,000 of its 11,900 cafes in the United States.

The company also will detail the launch of a new mobile ordering and payment system that it says will make getting a coffee fix even more convenient. That same technology will underpin deliveries in select U.S. markets next year.

Additionally, in coming months, it will debut express stores, coffee trucks and upscale "reserve" shops, which will offer premium specialized coffee sourced from small farms.

Starbucks' U.S.-dominated Americas unit had a traffic gain of 1 percent in the latest quarter, versus the 5 percent jump in the year-earlier period. An increase in sales of food, such as croissants and breakfast sandwiches, has helped offset slowing traffic in the last three quarters.

Chief Executive Howard Schultz in January warned that a "seismic" shift to online shopping was taking a bite out of traffic to U.S. brick-and-mortar stores.

That, executives said, contributed to a moderate slowdown in traffic in December 2013.

Traffic softened earlier this year than last and the weakness is expected to continue through the holiday season, said Steven Barr, who leads PwC's U.S. retail and consumer practice.

The chain, which has 21,000 shops worldwide serving 70 million customers weekly, forecast fiscal 2019 revenue of nearly $30 billion, up from $16 billion in the fiscal 2014 ended Sept. 28.

Plans for the Asia-Pacific region include doubling its cafes in China to over 3,000 by 2019.

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