Starbuck’s Squared

When I think about running a business I know  can achieve a competitive advantage by differentiation, cost, or response.  We all know Starbucks Coffee Company doesn’t really compete with cost.  Instead, they have decided to gain a competitive advantage through differentiation, not in their product, but in the way you can pay.  An article from the Wall Street Journal stated, “Starbucks mobile payment app was different from other retailers because it combined paying on the go with the reward program already in place” (

Starbucks Coffee Company has decided to invest $25 million in Square as an effort to stay ahead of everyone in respect to the mobile payment apps. With this investment, Starbucks will be able to give their customers what no other coffee shop does.

Customers will be able to walk into a store and up to the register, say their name to the employee, and receive their beverage without even taking their wallets out.  Of course in order  for this to happen the customer must have one of two apps: the Starbucks mobile app, which will allow a customer to pay with their Starbucks cards on their phones or the Pay with square app, which will allow customers to use their credit or debit cards on their phone.  They must also be in a store that is using the square technology.

Eventually, Starbucks will use Square’s technology to process all of the credit and debit transactions in 7,000 of their U.S. stores.  This partnership looks great and it could definitely help Starbucks stay ahead in the mobile payment area.  I am sure most people have been in a Starbucks recently, and you can tell how hectic it gets.  Right now, you can walk into any coffee shop, wait in line for your coffee, and pay for it like everyone else.  Can you imagine, a year from now, you’re standing in line at Starbucks, you get to the register, and you can order your coffee without even taking out your phone or wallet.

Starbucks has decided to give their customer a new way to pay and are leading the front on mobile pay technology.  What are some of the pros and cons of this decision and how do you think mobile pay technology will effect the way companies plan  their operation strategies?


7 thoughts on “Starbuck’s Squared

  1. In my opinion this would really speed up the process of the way Starbucks is running its stores. However, for someone like me who like to personalize my drinks a bit more than the normal usual, I would rather go to a Starbucks employee and orders my drink from there than ordering through the phone. I did order something online with Chipotle once and the order did not come out the way I wanted (it was actually missing a lot of stuff that I just simply checked). So I guess I’m one of those oldies who will still like the person-to-person talk/order. For someone who is on the go or tech-savvy, this might be a good idea since they do not want to stay in line for so long. However, it does lose that personal quality touch when you’re ordering through a machine.

  2. In my opinion, I believe this squared technology will help keep Starbucks ahead of the curve. As a Starbucks consumer, I appreciate the company investing in technology that will help reduce my time spend in line. I also believe this new technology may attract new customers that believe it will be faster to get a cup of coffee at Starbucks instead of at a neighboring competitors coffee shop. If this technology is a success in reducing time spent in line, I think many other companies will jump on board and adopt the new technology, too.

  3. Interesting post. I think that Starbucks has a good drip on its understanding of its customers. Like Apple Starbucks looks like it will never lower its prices because it know that even though it is “expensive” because it knows that its customers can afford it. So basically the company wants to add more customers by looking at all angles of its process of selling coffee. According to one of my Professors Starbucks actually tried to create a card that one could swipe on their way into the store that would automatically tell the people behind the counter what to make. The problems with that which I immediately realized is that most people do not always order the same thing everyday.

    When it comes to paying with your phone. I like the idea but I think that it only brings the payment time down minimally. I’m sure that Starbucks ran its statistics and finds that it is faster but I once went with my friend and he paid with his phone. The only different is that he wasn’t asked if he wanted his receipt which cut down about three seconds of our time in line.

    Also I am wondering how in the future one can “order your coffee without even taking out your phone or wallet” yet the Square app is on your phone so you literally have to take out your phone and scan it. Just curious how much further the technology has to go.

  4. In my opinion, I believe that the squared application that is offered on the iPhone is a an excellent strategy to have a competitive advantage over other coffee shops. I believe that Starbucks are seeking other ways to attract people to buy their coffees and visit their locations. A recent shocking that was added on their start bucks menu was alcohol beverages. Which was announced recently and would be served after certain hours of the day. which i believe was a smart strategy to lure customers to their coffee centers.I think that application will reduce the heavy line wait that some customers face during rush hour. The down side of this sort of check out express is that individuals may have different drinks depending on how they feel or the day. Some individual may change up their drinks according how they feel. i personally dont change up my selection or have any special requests but i know that some of my friends who are picky and need certain shots, amount of coffee, and other special requests that is not part of the menu.

    There are advantages and disadvantages for applying this technology, and it could be beneficiary and suitable to certain customers. Although, ordering your drink the standard fashion way is still available for customers with certain requests.

  5. Since Starbucks always get busy, I think that the “pay with square” smartphone app that allow customer to pay simply by using their phone will help them reduce the time process at the register. This strategy gave Starbucks an advantage over other coffee shop. On the other hand, I do think that although they reduce the time spending in line, the customer still have to wait for their order anyway.

  6. I use the Starbucks app that they currently have for iphone and it does speed up the process as far as paying, that is if I have my phone out, the app ready and money on the app. Otherwise it is faster to use my card but I don’t get the benefit of free drinks, part of the loyalty program that comes with the app. So I think it would be interesting to see how the operations would change if they registered you were already in the store by name. The coffee shop by my house uses level up and level up uses the technology to allow the business to know that you are in the store and allow you to order by name. I wonder how you avoid fraud? I know that will be a big concern with Starbucks customers. What incentives they will provide if you do use the new “name” software.

  7. Your post made me think of two aspects of business that people expect in our fast paced society: Electronic payment (mobile payments/app) and convenience. Apps are transforming the way we conduct business—whether it is paying for something or scanning a bar code to compare product prices. Since customers are less patient (well, depending on the product or service); this new convenient checkout will satisfy the customer more and sell more because you will expedite the transaction time.

    By decreasing the time it takes for one person to pay, make their coffee, and give it to them; the more ‘turnover’ rate will enable more coffee sales. I found myself wondering what competitors of all industries will create in the near future to gain a competitive edge and revolutionize the experience of a purchase transaction and product delivery. To what extent will businesses go to be better, faster, and more convenient for consumers? This will be interesting and only time can tell.

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