Starbucks makes a deal with several companies to use a new digital platform to pay with bitcoin

Starbucks appears to be jumping on the bitcoin bandwagon and could give bitcoin a needed boost as its price is dropping of late. A new digital platform will allow customers to use bitcoin and other cryptocoins at Starbucks.

A number of companies are involved in the deal

Starbucks is jumping on the cryptocurrency bandwagon. The coffee company, based in Seattle, is working together with Microsoft and leading global exchange Intercontinental Exchage, BCG and others to launch a new company that will be called Bakkt. Bakkt will have a new digital platform that allows Starbucks' customers to pay using bitcoin and even other digital currencies.

The platform will enable consumers and institutions to buy, sell, store and spend cryptocurrencies on the global network by this November. The platform converts bitcoin and others into US dollars to buy a Cold Foam, Cascara Cold Brew, or anything else at Starbucks.

Maria Smith, vice president of partnerships and payments for Starbucks said: "As the flagship retailer, Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into US dollars for use at Starbucks. As a leader in Mobile Pay to our more than 15 million Starbucks Rewards members, Starbucks is committed to innovation for expanding payment options for our customers."

Because of their volatility many critics feel cryptocoins are not suitable for payments. Just this year, bitcoin has lost about 50 percent of its value and can move up or down hundreds of dollars in a day. However, with this development bitcoin could be helped to become more of a competitor for fiat currencies. It could be bullish for its price as well.

Move could be a benefit for bitcoin and other cryptocurrencies

Brian Kelly, founder and CEO of BKCM said: "It's very big news for bitcoin because people say, 'Where can you spend it?' Now at every single Starbucks. Starbucks is seeing some kind of demand for acceptance of crypto and bitcoin, and to tie up with a huge regulated institution like the ICE is really positive for the space." Some retailers have long accepted bitcoin. Overstock.com was first to accept it back in 2014. Expedia and Shopify also accept cryptocurrency as payment. BKCM is an investment firm specializing in the block chain and cryptocurrency areas.

Starbucks

Wikipedia describes Starbucks as: "Starbucks Corporation is an American coffee company and coffeehouse chain. Starbucks was founded in Seattle, Washington in 1971. As of 2018, the company operates 28,218 locations worldwide...Starbucks locations serve hot and cold drinks, whole-bean coffee, microground instant coffee known as VIA, espresso, caffe latte, full- and loose-leaf teas including Teavana tea products,..Evolution Fresh juices, Frappuccino beverages, La Boulange pastries, and snacks including items such as chips and crackers; some offerings (including their annual fall launch of the Pumpkin Spice Latte) are seasonal or specific to the locality of the store. Many stores sell pre-packaged food items, hot and cold sandwiches, and drinkware including mugs and tumblers; select "Starbucks Evenings" locations offer beer, wine, and appetizers. Starbucks-brand coffee, ice cream, and bottled cold coffee drinks are also sold at grocery stores. "

While the first location outside of North America was in Tokyo in 1996 overseas locations now are almost a third of all their stores.

Intercontinental Exchange ICE

ICE is a US company that owns numerous exchanges for financial and commodity markets. It operates 23 regulated exchanges and market places. There are ICE futures exchanges in the US, Canada, and Europe. They include the Liffe future exchanges in the EU, the New York Stock exchange equity options exchanges and OTC energy, credit, and equity markets.

The company also owns 6 central clearing houses in Europe, Canada, Singapore, and the Netherlands. The ICE Clear Credit and the The Clearing Corporation have offices in New York city, London, Chicago, Houston, Winnipeg, Amsterdam, Washington DC, San Francisco and Tel Aviv

Previously published in Digital Journal

Starbucks partners with Alibaba Group to deliver coffee in China

Starbucks joins with Alibaba Group to deliver its coffee in Chinese cities beginning this fall. The company hopes the move will revive the growth of sales in its second largest market where it faces aggressive local competition.

In June Starbucks noted that it was seeking such a tie after it reported a slow down in the growth of Chinese sales. This was partly caused by a government crackdown on third-party delivery firms that had been helping drive orders from its cafes.

Starbucks CEO, Kevin Johnson told reporters: “I consider this strategic partnership to be one that ... will just be rocket fuel for Starbucks’ growth and continued expansion in China.”

Pilot delivery services begin in Beijing and Shanghai

A pilot project will see 150 Starbucks stores in Beijing and Shanghai begin delivery services. By the end of the year, the company and Alibaba hope to expand delivery to more than 2,000 stores in 30 different cities.

The partnership will involve collaboration with other Alibaba group businesses including the delivery platform Ele.me, the supermarket chain Hema, and online retailers Tmall and Taobao. Moble and online payment platforms, Allpay will also be involved.

Partnerships should improve Starbucks' delivery system

The delivery program should leverage Ele.me's already 3 million registered subscribers. The aim is to deliver orders within a half hour. Inside Hema stores Starbucks will establish "Starbucks Delivery Kitchens" and will use the supermarket's own delivery system to deliver orders. A local startup, Luckin Coffee, wants to go in competition with Starbucks and charges less than a dollar per order and claims its deliveries take only an average of 18 minutes.

No financial details of the deal released

There were no details of the agreement released and neither would say whether there had been discussing of equity stakes. The companies said they had been discussing the deal for more than a year.

China is a rich market for Starbucks but with fierce competition

There is a burgeoning cafe culture in China that has helped Starbucks grow in spit of saturation in the US. It has 3,400 stores in China and by 2022 it hopes that number will double.

However, competitors such as Luckin have rapidly expanded and offer cheap delivery, online ordering, big discounts, and good pay for its staff.

China has offered Starbucks rich pickings in recent years, thanks to a burgeoning cafe culture which has helped offset saturation in the United States. It has 3,400 stores in the country and plans to almost double that number by 2022. Luckin said that it planned to more than double its stores to 2,000 just by the end of this year. Starbuck's partnership with Alibaba is no doubt meant to also provide the same services as Luckin.

Starbucks

According to Wikipedia: "Starbucks Corporation is an American coffee company and coffeehouse chain. Starbucks was founded in Seattle, Washington in 1971. As of 2018, the company operates 28,218 locations worldwide...Starbucks locations serve hot and cold drinks, whole-bean coffee, microground instant coffee known as VIA, espresso, caffe latte, full- and loose-leaf teas including Teavana tea products,[7] Evolution Fresh juices, Frappuccino beverages, La Boulange pastries, and snacks including items such as chips and crackers; some offerings (including their annual fall launch of the Pumpkin Spice Latte) are seasonal or specific to the locality of the store. Many stores sell pre-packaged food items, hot and cold sandwiches, and drinkware including mugs and tumblers; select "Starbucks Evenings" locations offer beer, wine, and appetizers.[8] Starbucks-brand coffee, ice cream, and bottled cold coffee drinks are also sold at grocery stores. "

The first Starbucks location outside North America was in Tokyo in 1996 but now overseas locations make up almost a third of its stores. Between 1987 and 2007 the company has opened up an average of two locations daily.

Alibaba Group

Wikipedia describes Alibaba as follows: "Alibaba Group Holding Limited... is a Chinese multinational e-commerce, retail, Internet, AI and technology conglomerate founded in 1999 that provides consumer-to-consumer, business-to-consumer and business-to-business sales services via web portals, as well as electronic payment services, shopping search engines and cloud computing services. It owns and operates a diverse array of businesses around the world in numerous sectors, and is named as one of the world's most admired companies by Fortune."

As of June this year the market cap of the company was at $542 billion. It is one of the world's top ten most valuable and largest corporations. As of this year it has the 9th highest global brand value. The company operates in more than 200 countries. It is the world's largest retailer and one of the largest Internet and AI companies.

Previously published in Digital Journal

Starbucks speeds up closing of 150 US stores as sales slow

Starbucks is planning to speed up its closings of US stores next year as sales growth is cooling. Usual rate of closings is 50 stores a year but next year it will close 150 under-performing stores in heavily penetrated markets.

Starbucks has huge presence in the United States

At present, Starbucks has about 13,900 locations in the US almost as many as the 14,400 restaurants operated by competitor McDonalds. In just the last year Starbucks has opened 1,000 new stores in the US, Canada, and Latin America.

The new stores in some instances may be taking customers from already established operations. Also, competition from rivals such as Dunkin Donuts and McDonalds is increasing.

Starbucks has 25,000 coffee shops in 70 countries. After the announcement of the closure Starbucks shares fell 2 percent in after hours trading.

Competition is heating up

Analyst Sara Senatore said in a research note: "Intensified competition in the slushy coffee category is exacerbating the shift towards health and wellness weighing on Frappuccino demand. Starbucks will focus on Teavana drinks and other more healthful options in its core offering, which it views as 'more differentiated.'"

Even though there is strong competition Starbucks expects 1 percent growth in global sales in the third quarter.

Starbucks holds race-bias training for employees in US

The growth in sales came in spite of an uproar over the arrest of two black men at a Philadelphia Starbucks as reported in a recent Digital Journal article. Two men were arrested when they were simply waiting for a third man to arrive for a business meeting.

The company closed its US stores on May 29th to hold a training session on racial bias. The closing of the stores was estimated to have cost Starbucks $12 to 14 million in lost sales. Although some criticized the exercise as virtue signaling, many black officials and activists were cautiously optimistic about the session.

New shops may be cannibalizing existing operations

Analyst Senatore said that the new stores could be cannibalizing customers from existing stores. She estimates that in some cases 1 out of 7 transactions are diverted from existing shops to the new ones.

A good example is in Burlington Vermont. For years, there was only one Starbucks location on the south side of the city. It was on a main road. However, a new shop was but built right across the street from the older cafe.

The former CEO of Starbucks Howard Schultz at present executive chairman has announced he is leaving his position and may run for public office, even perhaps for president as suggested in the appended video. He has been with the company for decades. Schultz is a billionaire.

Previously published in Digital Journal