Starbucks customer traffic stalls amid mobile pay congestion

NEW YORK — Starbucks says a key sales figure rose 3 per cent in the U.S., but that the increase was the result of higher average spending and that customer transactions were down.

The coffee chain attributed the decline to a change in its loyalty program that led to people no longer splitting their orders to tally additional rewards points. Factoring in that change, the company said traffic was flat. Starbucks has also said the popularity of its mobile order-and-pay option has created congestion in some stores, causing some people who walk in to then leave without buying anything.

Chief Financial Officer Scott Maw says the company has implemented changes to address the congestion and that sales improved throughout the quarter, and that April has been even stronger. The changes include training employees to specifically handle mobile orders in stores. He said the company is also testing adding workers to help.

Starbucks says about 1,200 of its stores see a high volume of mobile orders — more than 20 per cent of business during peak hours.

As for the past practice of people splitting orders to collect more points, Maw said that slightly skewed past traffic figures.

“The reality is that over several years, those traffic numbers were off by some small amount,” he said.

For the quarter, Starbucks Corp. earned $652.8 million, or 45 cents per share, in line with Wall Street expectations. Total revenue was $5.29 billion, short of the $5.42 billion analysts expected, according to FactSet.

Starbucks shares fell 4 per cent in after-hours trading.


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