This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Starbucks' Digital Tip Jar Turns Loyalty Into Money

Starbucks' mobile payments are based on two-dimensional bar codes, rather than the three-dimensional QC codes. Its collection of credit card payments are based on Square, a start-up it has invested in and that has yet to offer a chip card reader in the U.S.

It's a neat trick to get headlines for innovation when you're using older and soon-to-be-obsolete technology, but that's part of Starbucks' magic under "chief digital officer" Adam Brotman, who reports directly to Schultz.

Still, Starbucks is managing to turn a loyalty program into its own version of money, and to get that currency used by a key demographic: young workers in a hurry. Loyalty program members can start with something that looks like an ordinary credit card, loading it with cash from their own credit cards, and use the cards in Teavana stores as well as Starbucks locations.

From there it's a short trip to getting the app, which offers more convenience. But the whole program ties Starbucks directly to users' actual wallets, and lets it do market research tied to individuals' buying habits, which it can use in planning new stores or expanding its product lineup.

The expansion this year will be focused on food, a network of bakeries being built by La Boulange, acquired in 2012, and on tea, through the Teavana chain acquired last year, a deal which our Rocco Pendola said made Starbucks a "screaming buy."

Without using bleeding-edge technology, Starbucks has thus turned its loyalty program into both a virtual currency and a market research tool, distracting from what might otherwise be a high-profile management succession.

No wonder Starbucks was recently ranked as the fifth most-admired company in the world by Fortune, trailing only Apple (AAPL), (AMZN), Google (GOOG), and Berkshire-Hathaway (BRK.A).

At the time of publication the author owned shares in AAPL, AMZN and GOOG.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
SBUX $56.39 0.25%
AAPL $94.19 -1.04%
FB $118.06 0.54%
GOOG $695.70 0.48%
TSLA $222.56 -4.20%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs