Starbucks Revamps Rewards Program

Starbucks Corporation SBUX Rewards loyalty program members will soon be able to earn rewards immediately after joining the program, the coffee chain said Tuesday. 

The Details 

The changes to Starbucks Loyalty Rewards, which has 16 million members, will become effective April 16, Starbucks said. 

The rewards program was introduced in 2009 and has seen 25-percent membership growth in the last two years. Starbucks Rewards transactions comprise 40 percent of the tender in U.S. Starbucks stores, according to the Seattle-based company. 

The updates include: 

• All Starbucks members earn free rewards from the day they join.
• A new tiered reward structure will replace the single option, offering members more ways to use Star Rewards.
• No Star expiration for Chase credit and debit cardholders.

Feinseth's Take 

Tigress Financial analyst Ivan Feinseth said in a note that the expansion of Starbucks Rewards will boost return visits and build a loyal and addressable customer base that drivers additional sales growth and market opportunities.

The analyst noted the coffee chain's "very strong" first-quarter print Jan. 24 that brought increased 2019 revenue and earnings projections. 

The ongoing store growth in both the U.S. and China combined with its industry-leading loyalty, and digital marketing programs, are driving its ongoing growth," Feinseth said.

Starbucks' partnership with Nestle A/S ADR NSRGY will also add incremental growth, he said. 

"I believe further upside exists from current levels and continue to recommend purchase."

What's Next 

U.S. and Canadian coffee makers have amped up their competition and rivals like Dunkin Brands Group Inc DNKN and McDonald's Corp MCD are investing in their own java offerings.

App-based rewards programs are gaining steam with Starbucks competitors. Starbucks customers have enjoyed using the app for ordering and paying ahead of time.

Starbucks shares were up 0.36 percent at $71.64 at the time of publication Wednesday. 

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Photo courtesy of Starbucks.