Starbucks may have projected slower growth recently, but it looks to be business as usual for the coffee retailer, and that business traversed several industries and a couple continents this week.
Most notably, Starbucks is reportedly one of the key backers of a new company, Bakkt, which the Intercontinental Exchange (ICE) created to better integrate cryptocurrencies into global commerce. In other words, there’s a high possibility Starbucks might accept Bitcoin as payment one of these days.
But as my hero John Oliver says, “this is a brand new, very complicated space and literally nobody knows how it’s going to develop so you need to be careful.” And while there’s much ado about crypto lately, the reality is that Bitcoin and others remain highly volatile in terms of price, which is one of the biggest reasons more retailers haven’t adopted them as forms of payment.
That could change, partly because Microsoft is providing the cloud infrastructure for Bakkt and companies like consulting heavyweight BCG are involved. There’s also this telling statement from Starbucks: “As the flagship retailer, Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into US dollars for use at Starbucks.”
Starbucks has been an undisputed leader in mobile payments over the years, so its involvement in the space isn’t that surprising, and it could make cryptocurrency more attractive to investors and therefore less volatile. The question is, will it be enough to turn hype into a mainstream form of payment?
Interestingly, in some overseas markets, Starbucks has been criticized of acting too slow when it comes to technological advancements. That’s a big reason for the company’s move this week to strike a partnership with Alibaba and integrate delivery services into its business in China. Starbucks will use the Alibaba-owned food-delivery service Ele.me to enable delivery at 2,000 stores by the end of the 2018. The deal includes a virtual store that integrates with Alibaba’s apps like Alipay and Hema.
Starbucks currently has 3,400 stores in China, with plans to double that number by 2022. But it’s also facing a lot of competition in this market, particularly from Luckin Coffee, who charges less and also just raised $200 million. That said, Starbucks still controls about 80 percent of the coffee market in China, and the company claims this deal with Alibaba “opens up 500 million or more active users of those apps that will have access to Starbucks.”
Stateside, the coffee giant has a slightly different tactic: standalone bakeries. This week, Starbucks opened the first of a planned 1,000 Princi bakeries, a “high-end Italian bakery chain.” The shop serves a mix of pizzas, pastries, beer, wine, and, of course, coffee.
Starbucks backed Italian bakery chain Princi in 2016; the Seattle store is the test location for this “upscale retail strategy.” Because apparently paying almost $5 for a latte is no longer considered upscale. Starbucks opened a Princi at its Reserve Rotary and Tasting Room last fall, as well as one at the Flagship Reserve store at the Starbucks HQ. This new location is the first standalone store. NYC and Chicago locations are in the works.
Starbucks is also one of the major chains joining the movement to ban single-use plastic straws, having recently announced it will eliminate them from all stores by 2020. But with all of the above expansion, not to mention Starbucks’ general reach, which is huge, will trading straws for sip-able lids make a difference?
That’s what several folks are wondering. The Guardian even weighed the new lids against the old lid-and-straw combo and found the former to be slightly heavier, therefore using more plastic. Starbucks’ notes these new lids are “made from polypropylene, a commonly-accepted recyclable plastic that can be captured in recycling infrastructure,” but that only matters if people actually recycle the lids. The numbers aren’t encouraging — only around 9 percent of the world’s plastic is recycled. Color me cynical, but since Starbucks partially helped create the disposable coffee world we live in, I’d say the company’s going to need a bigger fix if they want to make a true impact in terms of waste reduction. Hopefully they’ll continue to prioritize addressing waste issues, even as they push to pick up those lagging numbers.
We’ll have a chance to ask more at the next Smart Kitchen Summit, when we talk to Ben Pote, Starbucks’ Director of Culinary, Global Product Innovation. Swing by if you’re in the area, and leave your thoughts, musings, and rants on all this news in the comments below.