Mobile Payment Takes Off At Starbucks


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I took my kids to McDonald's recently, and paid with a credit card, like I do every time. The process was quick and efficient, and so it was hardly a "pain point," an industry term for something that causes trouble in a transaction that could easily be improved upon.

And yet the restaurant industry is rapidly changing this method of payment. Several chains are, or are in the process of, adopting mobile payment technology to, at least in theory, make the whole payment process even easier.

But if paying a bill isn't a true pain point, would consumers use mobile pay?

The answer appears to be yes, at least if you're talking about coffee drinkers. Yesterday, as the company boasted 6 percent same-store sales growth in the first quarter, the coffee giant Starbucks said that 14 percent of tender at its domestic locations now comes through its mobile payments. That's 75 percent more than the previous year.

Apparently, people really like using their smartphones.

"We ... believe that accelerating global adoption of smartphones and mobile technologies in general will continue to transform and evolve the retail landscape in areas of payment, loyalty and consumer experiences in years to come and ways that just a year ago, we could not conceive," Starbucks CEO Howard Schultz said on the company's conference call yesterday.

It's possible that Starbucks customers are simply more likely to use technology than are customers at, say, that McDonald's I used in suburban Minneapolis. And the chain has been at the absolute forefront of technological adoption in the restaurant industry outside the pizza business.

Indeed, 10 million Starbucks customers are using the company's loyalty app, twice as much as last year, and 8 million of the program's customers are earning rewards—about 25 percent of all transactions at US company stores. The company's Starbucks Card program now represents more than a third of the company's transactions in the US and Canada.

Still, the ubiquity of smartphones may simply make mobile payment an important cost of business, at least in the limited service industry that depends more heavily on speed and convenience. And so other chains are quickly following suit, including Dunkin' Brands, Wendy's, Burger King, Chipotle and others. Eventually, I'll just be able to leave my wallet at home.

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