Starbucks and Dunkin’ Donuts are leading the industry and testing the viability of coffee delivery. But will it work on a large scale?
Could a fresh, hot cup of coffee be the next thing delivered to your door? Starbucks and Dunkin’ Donuts think so. Both companies recently launched services specifically to make coffee delivery the next food industry trend. Does it really make sense? While that remains to be determined, the first on-demand coffee services are now being tried in selected service areas.
Is Coffee-On-Demand Available in Your Area?
For most people, the answer is unfortunately, not yet. However, for those lucky coffee aficionados in the Seattle area, Starbucks delivery is an option. Dunkin’ Donuts, on the other hand, stepped up to the plate in Dallas. Assuming those experiments prove to be successful, we can assume these companies, and others, will expand the service to other cities.
Obviously, demographics will dictate which cities will top the expansion lists for both companies, but it’s safe to assume they will be areas where the brands are already strong. Delivery won’t be cheap, but there are certainly occasions where coffee lovers will be willing to pony up the price of the coffee, plus a hefty delivery fee, to enjoy their beverage of choice.
Will a Delivery Model Will Pay Off?
With the market for all types of food products rapidly evolving, especially with the adoption of apps for cell phones, a variety of food companies are seeing a rapid growth in delivery demand. According to industry observers, the Starbucks and Dunkin’ Donuts apps were already successful, and the addition of a delivery option was simply the next step in their evolution.
New ordering methods are, “simply new ways to meet customers where they are in their day,” said Maggie Jantzen, Starbucks Spokesperson.
In other words, busy customers may simply not have the time to make a trip to the coffee shop, but they’re willing to pay a premium to have their favorite brew brought to them.
“Although fast food and coffee chains have great conveniences—including in-store and drive-through options—the expectation by consumers to get restaurant food delivered is increasing and broadening across new segments,” said Darren Tristano of food industry research company Technomic.
Starbucks, for example, has heavily saturated its primary markets, and the need to find new growth opportunities is certainly a priority for the organization. Dunkin’ Donuts is in a different situation. Although both companies still have the potential to expand in some markets, they are already heavily represented in their core market areas.
How Does the Service Work?
Neither Starbucks nor Dunkin’ Donuts is actually using their own store personnel for the deliveries: both companies have partnered with other organizations to provide the service. Starbucks has partnered with Postmate to provide delivery for its pilot program in Seattle, while Dunkin’ Donuts is currently teaming up with DoorDash to provide delivery in markets including Dallas, Chicago, Los Angeles, and a couple of other large metropolitan areas.
It’s been widely reported that both companies are planning to expand their delivery services in the coming months. Starbucks is also experimenting with another deliver platform called Green Apron Delivery, which is a specialized service limited to very large buildings.
The service is accessed through company apps and, to this point, has been successful in its test markets, like the Empire State Building. While no one knows if the service will produce the results needed to expand the service nationwide, current indications show promise.
What Issues Must Be Overcome?
Postmates has developed a unique carrier to keep the coffee hot and prevent spills while in transit. But, will that be enough to ensure customers are satisfied enough to keep ordering the coffee and paying the delivery fees on top of the prices for premium coffees?
Common business models suggest there are strong markets for the service in large metropolitan areas, but the infrastructure will need to be strengthened if the service is to grow. Starbucks and Dunkin’ Donuts may both need to attract additional delivery partners to make the model a success as their service areas expand. Additionally, customers in expanded market areas must become familiar with the service and the advantages it offers.
Starbucks and Dunkin’ Donuts already enjoy a strong demand for their coffees, and the delivery model provides a logical way to expand that market. Their phone apps make it easy for customers to order and pay for their coffee, and delivery services appear willing to do whatever it takes to partner with the companies. If the experiment is even remotely successful in the current markets, you too may soon be enjoying quality coffees delivered to your door.
