What is the Cost of Starbucks’ New Delivery Service?

Photo by: Jewel Samad/AFP/Getty Images
Source: Jewel Samad/AFP/Getty Images

Starbucks caused a considerable commotion recently with the revelation that it was instituting some new social intiatives — most notably, the company was pushing its baristas to engage customers in conversations about race. That didn’t go over too well with many people, and the backlash was pointed and fierce. While that may have turned some people toward or away patronizing Starbucks locations in the future, there is a new addition to its offerings that may win over plenty of new customers.

Delivery. You know, like a pizza. But this time, we’re talking about caramel macchiatos.

According to a report from the Associated Press, via The Huffington Post, word is that Starbucks plans to roll out its new delivery service to customers in New York City and the company’s hometown of Seattle later this year. In Seattle, the actual deliveries will be carried out through a partnership with courier service Postmates, while New York City customers will have their orders delivered via special Starbucks shops set up in certain buildings around town.

Naturally, there will be a fee associated with the delivery option, and Starbucks officials say that the average wait time for your order to arrive should be around 30 minutes. But Starbucks didn’t stop there, as it also announced that mobile order and payment options — which had been in a testing phase, of sorts — were being expanded as well. States in the Pacific Northwest are the first to get the new service, with nationwide coverage planned for later this year.

As we’ve previously covered, Starbucks is really taking the bull by the horns when it comes to integrating technology and shifting consumer preferences into its business model, and so far, it’s paid off in a big way.

Critics have some big but justifiable questions as to whether or not the new plan will actually work. USA Today lays out the most obvious problem with the new delivery service, which is that it will probably be fairly expensive for most customers. Total costs could end up being as much as $10 for a single order, considering that courier companies like Postmates charge at least $5 for a drop-off.

And there is plenty of reason to be skeptical, especially when it comes to pricing. But it’s important to keep in mind that Starbucks is doing this as an experiment in two different cities, with two different methods of delivery. One will likely trump the other, and when the service goes nationwide, the logistics should be worked out so as to provide the least-expensive option.

Even if delivery fees inflate the price of Starbucks’ offerings, that probably still won’t stop the masses from opting-in. Confidence is being spurred by the fact that the company’s mobile initiatives have paid off handsomely as well, with as many as 8 million weekly transactions being processed through its mobile application, accounting for 18% of its U.S. revenue, per The Seattle Times.

Now, just imagine making it even easier for consumers to get their beverages. Simply hit the button and wait. It may cost you a few extra bucks, but Starbucks’ leadership is willing to bet that people will do it. Besides, what you’re truly paying for with delivery services is convenience. If customers don’t feel that the charge is worth it, then they will continue to march down to the actual storefront.

Also, considering the string of victories that Starbucks has been able to piece together over the past several years — including small price increases to bolster revenues, implementing loyalty programs, and initiatives that help retain staff, cutting down on turnover costs — it’s hard to say that the company hasn’t been on a roll. It’s stock price has been hitting record highs, and generally speaking, people seem happy with what’s brewing in Seattle. That’s not to say that the delivery service is a sure-fire victory — it isn’t — but if Starbucks doesn’t go for it, someone else will.

Coffee on the go may be the next big thing for Starbucks, even as most of the attention is diverted to its race discussion for now. But again, Starbucks is making the effort to be the most cutting-edge company in the business. And there’s plenty of reason to think that a delivery system will be successful.

Follow Sam on Twitter @Sliceofginger

More from Business Cheat Sheet:

Want more great content like this? Sign up here to receive the best of Cheat Sheet delivered daily. No spam; just tailored content straight to your inbox.