The Wall Street Journal recently reported that Starbucks Corporation (SBUX) has called off its partnership with Square, Inc. Following the partnership formed in 2012, Starbucks customers could use Square’s mobile application for making quick payments at its stores.
Square’s Wallet app ceased to work at Starbucks stores last week, much earlier than planned. Square had intended stop supporting the app in early 2015. Last week, Square confirmed in an email that it has discontinued the Wallet app in order to upgrade to Square Order, a new app which allows consumers to place orders in advance before showing up at stores.
Nonetheless, Starbucks will not use the new Square app at its stores as it has its own successful mobile-payment app.
Square will however continue to process debit and credit card payments at 7,000 Starbucks stores in the U.S.
The coffee company launched its “Mobile Order & Pay” initiative using its app in Portland, OR on Dec 3 and plans to launch it nationwide by 2015-end. This will allow customers to order before stepping into a Starbucks cafe.
Starbucks also intends to introduce food and beverage delivery through users’ mobile devices in select urban markets in the second half of 2015.
Starbucks is undoubtedly the number one mobile payment app in the U.S. The company had 90% share of mobile payments in the U.S. in 2013. Furthermore, nearly 16% of all its U.S. transactions take place through mobile, growing 50% annually. These new mobile initiatives are expected to quicken service, increase convenience and improve customer loyalty thereby driving transactions and spur traffic.
Starbucks carries a Zacks Rank #3 (Hold).
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Better-ranked restaurateurs include Darden Restaurants, Inc. (DRI), DineEquity, Inc. (DIN) and Domino's Pizza, Inc. (DPZ). While Darden Restaurants and DineEquity sport a Zacks Rank #1 (Strong Buy), Domino's Pizza holds a Zacks Rank #2 (Buy).
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