SAN DIEGO, CALIF. (TheStreet) -- Starting Wednesday, Starbucks (SBUX) stores in Portland, Ore. will be the first to offer customers a mobile means of placing coffee and pastry orders without the hassle of standing in line. The company's end game is to entice the time-crunched customer, with the reward of zero wait time, to take a coffee detour.
The new smartphone ordering system, entitled "Mobile Order and Pay," lets customers using the Starbucks iPhone application place orders using an in-app menu that allows for customization and simultaneously preview wait times for nearby stores. Once a mobile order is submitted, the customer can then head straight to the in-store hand-off counter at a designated time and bypass the line. The system is currently only available for the iPhone.
Starbucks is labeling the release with a "beta" tag to denote that it still has to figure out some kinks, but the company expects to have the mobile order system available to all customers in the U.S. before the end of 2015.
The release is the most important addition to the Starbucks mobile application since the 2011 launch of the company's now widely popular barcode-scanning mobile payment system, Chief Digital Officer Adam Brotman told TheStreet, as mobile orders are anticipated to be a catalyst for sales. Starbucks stores currently process 7 million mobile payment transactions per week with the in-app mobile pay feature accounting for 16% of all in-store transactions, Brotman said. Those figures are expected to experience a healthy boost once mobile ordering becomes more broadly available.
Mobile order will be available to customers using the Starbucks for iPhone application in the Portland area, with everyone else getting access to just a mobile version of the Starbucks menu. On first use of the mobile order feature, customers will be presented with a tutorial video and required to grant the application access to their location in order for the feature to work.
The updated Apple (AAPL) iPhone application comes with an "Order" tab where customers can go to select menu items and customize drink orders. The application user can preview approximate wait times at nearby stores, select a store, and click to complete the order. The bill is immediately paid using the customer's digitally stored Starbucks Card with the order then sent to the appropriate store to be processed.
Starbucks will add the next major city to the mobile order pilot program during the first quarter of the 2015 calendar year, Brotman said, and will test the same order-by-iPhone capabilities internationally during the first half of the year. The company also plans to soon release an Android version of the application and introduce additional features such as the ability to schedule an order as the system rolls out more broadly in the coming year.
Though still in its early stages, Starbucks does expect the program to drive additional visits to its stores. The convenience of the order-ahead option gives customers more confidence that they can squeeze an extra Starbucks run or two into their day, Brotman said. Plus, given that staffers will no longer need to take or process orders for mobile customers, the coffee conglomerate expects that its stores will be able to handle higher volumes of traffic and sales.
The launch of the pilot program in Portland comes just a day before the Seattle-based company's biennial investor day, which will be hosted at its headquarters and streamed online. Starbucks' investors and analysts hope to hear from company executives on their plans to spice up same-store sales as growth slowed to 5% in the Americas during its fiscal fourth quarter, down from 6% growth in the third quarter and 8% growth in the year-ago quarter. Starbucks' shares are trading up around 4% since its fourth-quarter report, despite missing revenue estimates.
The company held a previous investor day earlier this year, noting that it aims to become a $100 billion company, aided by the company's mobile efforts, as well as its expansion into the hot tea market, with its acquisition of Teavana.