More than a quarter of all Starbucks orders in the U.S. are now paid for with a smartphone

Outside Starbucks’ Pickup store in New York City that opened this past winter. (GeekWire Photo / Taylor Soper)

The news: As part of its fiscal second quarter earnings report, Starbucks said that mobile order transactions now make up 26% of total orders at U.S. company-operated retail stores. That’s up from 18% in the year-ago quarter. Mobile order sales have also doubled in China year-over-year.

Why it matters: Starbucks has been encouraging customers to order with its app for contactless payment amid the global pandemic. It is also rolling out a new store concept called Pickup designed for customers who order ahead with the app. The Seattle coffee giant debuted its mobile order-ahead app feature in late 2014 and it quickly caught on with Starbucks Rewards members. It has turned Starbucks into a leading mobile payment app — competing with the likes of Google Pay, Apple Pay, and Samsung Pay.

Starbucks CEO Kevin Johnson: “We continue to leverage the advantages of our mobile app to elevate the personalization of the customer experience and deepen customer engagement.”

More tech: On the company’s earnings call, Johnson noted that Starbucks is using its Deep Brew AI engine to run predictive analytics that model vaccination progress in key markets around the globe and assess potential impact on international sales. Deep Brew is also used to personalize offers and suggestions via the Starbucks app.

“Our work in AI is providing Starbucks the underlying predictive models enabling us to fuel The Great Human Reconnection by freeing up partners to do what they do best – connect with customers and deliver a world-class customer experience,” Johnson said.

Starbucks just missed Q2 revenue estimates but beat profit expectations. Shares were down nearly 3% Wednesday.

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