Operations

Starbucks is exploring delivery-only stores

After testing “virtual” kitchens in China, the Seattle-based coffee giant is looking to bring the model to the U.S.
Photograph: Shutterstock

Starbucks may test delivery-only or “virtual” units in the U.S.—particularly in large metro areas—after experimenting with the model in China, the coffee giant’s CFO said at an investment conference earlier this month.

“It doesn’t really matter where that is prepared,” Starbucks CFO Patrick Grismer said at the Piper Jaffray Consumer Marketplace Conference. “What the consumer cares about is that it is of high quality and that it’s delivered in a timely fashion. … We’re learning from their experience to understand how we might bring a similar model to life in the U.S.”

In China, Starbucks has partnered with major delivery provider Alibaba to create the “hidden kitchen” for delivery orders, Grismer said.

Starbucks did not respond to a request to comment on their delivery-only plans in the U.S. 

Starbucks launched U.S. delivery in the fall via a pilot program in Miami with Uber Eats. Delivery is now available at 1,600 stores across seven cities. With traffic flat at the coffee chain, the company continues to look for ways to grab customers through all available channels.

The virtual kitchen isn’t the only alternative model the company is considering. It’s also mulling a mobile order and pickup location, without a cafe, in New York City, Grismer said.

“We think [it] would have strong appeal in terms of how we can improve throughput, better accommodate demand, reduce the lines and satisfy customers as we go,” he said.

Starbucks is in a fierce battle in China with Beijing-based Luckin Coffee, the country’s second-largest coffee chain. Last month, Luckin raised more than $570 million during its U.S. initial public offering.

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