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Originally published March 20, 2013 at 10:05 AM | Page modified March 21, 2013 at 6:47 AM

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Starbucks moves rewards program into grocery stores

The points program now has 6 million members and is poised to reach 9 million by fall, Starbucks said.

Seattle Times business reporter

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Starbucks’ annual shareholders meeting typically has something for everybody, and Wednesday’s version was no different.

Part entertainment (John Legend was this year’s surprise musical performer), part infomercial, it also featured inspirational talks, a pep rally review of the year and even some news bits tossed in.

The meeting drew a packed crowd, including a huge contingent of Starbucks employees, at Seattle Center’s McCaw Hall.

In the news part, the company said that beginning in May it plans to extend its rewards-points program to grocery-store purchases of Starbucks packaged coffee. It will add other items, possibly Tazo tea and K-cup products, in the fall.

The rewards program, which allows customers to prepay for purchases, offers free drinks and food based on past purchases.

The program began in late 2009 for purchases in Starbucks shops. It has 6 million members and is expected to reach 9 million by fall.

Rewards-card transactions plus Starbucks’ 3 million mobile transactions each week represent a third of all payments made at U.S. Starbucks locations.

As part of an effort to support U.S. manufacturers, the company also said it placed an order for 100,000 ceramic mugs at American Pioneer Manufacturing in New Waterford, Ohio. The order is on top of 70,000 to 80,000 mugs it expects to buy each year from nearby American Mug and Stein.

Those mugs were bought previously from overseas manufacturers.

The meeting’s much-anticipated performer was Legend, the singer-pianist, but it was Harvard Business School Professor Nancy Koehn who stole the show with a lively presentation about leadership, using examples from the life and career of Abraham Lincoln.

Koehn has followed Starbucks for nearly 20 years, writing Harvard Business Review case studies about it and teaching it in class. CEO Howard Schultz sometimes speaks to her students.

“What Howard and his team are doing here ... they’ve really built the template for business in the 21st century,” Koehn said in an interview after the meeting. “No one else is leading with the finesse and commitment that this company is.”

That includes a host of qualities, she said, and listed taking care of employees to avoid high turnover, acknowledging mistakes in order to fix them, and demonstrating responsibility for suppliers and others affected by your business.

“It will no longer be enough to sell high and buy low,” she said.

At the meeting, Schultz reminded employees and investors that the company does not succeed in a vacuum.

“Our success is linked to whether or not America succeeds,” he said. “We can’t succeed with almost $17 trillion in debt. We can’t succeed with 14 million people unemployed.”

Executives also discussed Starbucks’ $1.4 billion profit for the fiscal year ended September and its three recent acquisitions — a juicery, a tea chain and a bakery.

Officials at La Boulange, the California bakery acquired, will overhaul food cases in 2,500 Starbucks stores this year, including in Seattle.

Food represents 19 percent of the chain’s sales, up from about 10 percent in the 1990s, but not as high as executives would like it to be.

Starbucks plans to use some of the same bakery suppliers, but will require them to make changes to equipment, ingredients and delivery times.

Shareholder Melody Westerdal, of Bellevue, who has owned Starbucks shares off and on for decades, said she wishes she had gotten in on the initial public offering in 1992.

She also wishes the chain would bring wine and beer into more stores, she said before the meeting started.

“Sales would go like that, and their stock would skyrocket,” Westerdal said.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com. Twitter @AllisonSeattle.

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