Starbucks (NASDAQ: SBUX) announced this morning that it is bringing its mobile payment test programs to the Big Apple this fall, letting smartphone users pay for their drinks and other sundry purchases at the famous coffee retailer. Customers using the Starbucks Card Mobile app will be able to buy their coffee at 300 locations in and around New York City, including locations in Suffolk and Nassau counties, Long Island, and the city proper. The New York mobile payment initiative comes six months after Starbucks began testing its mobile payments across the country. It also marks the program’s first expansion beyond Apple Inc.‘s (NASDAQ: AAPL) iPhone App Store, coming to Research in Motion‘s (NASDAQ: RIMM) BlackBerry phones alongside the new locations.
While the Starbucks Card Mobile hasn’t become a standard across the company’s more than 6,500 outlets, the test program has slowly grown since it was initially launched in the company’s hometown back in 2009. Starbucks first launched the Starbucks Card Mobile payment method in Seattle and 11 other west coast cities. Last March, the coffee company took the program nationwide, expanding to 1,000 of its stores based at Target (NYSE: TGT) big box retail outlets. The new expansion in New York marks the first time Starbucks has introduced the program into a complete market rather than at specific test spots or a single retailer like Target.
The Starbucks Card Mobile program also represents Starbucks’ latest strategy in looking to leverage the Internet in growing its business. Earlier this year, Starbucks announced that, in a partnership with its longtime WiFi provider AT&T (NYSE: T), the company would be offering free Internet access at all of its retail outlets. Starbucks had used WiFi access as a draw at its stores for years, but this marked the first time that access was made both free and unlimited. The company also announced just today that it is leveraging free WiFi access to further entice customers by offering free access to e-books, online editions of newspapers, music, and other entertainment through a partnership with Yahoo! (NASDAQ: YHOO).
The new Starbucks Digital Network—whose partners include Apple, News Corp. (NYSE: NWS), the Gannett Company (NYSE: GCI), Pearson PLC (NYSE: PSO) among others—was announced in June when Starbucks debuted its free WiFi plans with AT&T and announced its partnership with Yahoo!. Users who access the internet at Starbucks locations will now be automatically brought to portal where they can access free online editions of USA Today and the Wall Street Journal, free songs from iTunes, the “Bookish Reading Club” with titles from Harper Collins and Penguin Group, and movies from website SnagFilms. The majority of free content will only be accessible while users remain at Starbucks. Starbucks will take a percentage of sales of paid content but has not specified what percentage the company takes from each purchase.
Starbucks has been growing its physical presence as well as its online business in 2010. After slowing its retail expansion efforts in recent years, the company opened new locations around the world, including its first location in Budapest, Hungary last June. The company’s renewed vigor has investors feeling positive about the company going forward. Shares hit a 52-week high of $28.80 in early trading today, up by more than 20% since September. With analysts keeping bullish on Starbucks, investors would do well to pick up shares now while there’s still room for growth before the end of fiscal 2010.
As of this writing, Anthony Agnello did not own a position in any of the stocks named here.
