Starbucks Corporation (SBUX): Why Drive Thru Locations Are So Important

Alstead: I would say fundamentally yes. I have no doubt that among that base of stores that don’t have a drive-thru, there will be some here and there that allow us over time. Sometimes it may be negotiations with the landlord to be able to add it in, lots of considerations that can go into that, but for the most part, new drive-thru opportunity is really new stores that will open from here.

Tom: And drive-thru internationally? Is that going to be, 60% of them will be drive-thrus someday, or you don’t know?

Alstead: Well, we don’t know that yet. The U.S. is more of a mature drive-thru market than most places around the world, so the opportunity is bigger and more immediate here. We are finding opportunities outside of the U.S. to deliver the same kinds of economics and the same kinds of traffic patterns with the drive-thru. It’ll be a little slower.  We’re going to learn our way through that, but there’s opportunity.

Tom: Where does the idea come from to create a drive-thru inside of Starbucks Corporation (NASDAQ:SBUX)? Is that just one location that says, “Hey, let’s see if we can test this concept here?” The idea gets pitched through an innovation group or how does that one bubble up?

Alstead: An idea like that one goes all the way back to the ’90s. I mean literally not long after the IPO we had no drive-thrus across the system yet. But people kept asking, “When are you going to add drive-thrus?” Of course, looking at what other concepts have done and understanding the great economics that others have in that space, we’ve been asked from outside the company and inside the company for years. So there was probably years in the ’90s where there was increasing opportunity, and to some extent pressure from time to time to say, “Why don’t we try a drive-thru?”

We held back for a while. We wanted to make sure that when we launched a drive-thru, we could do it effectively, that we could provide the kind of experience that we want to, to our partners at the window, to the customers driving through the line, those had to happen before we could get ourselves to the place of opening a drive-thru.

We finally did that in the ’90s and have been steadily growing them since, as we’ve recognized that the economics to our shareholders are fantastic, the experience to our customers are fantastic,  it’s just a win all around.

The article Why Drive-Thru Locations Are So Important for Starbucks originally appeared on Fool.com and is written by Tom Gardner.

Tom Gardner owns shares of Starbucks. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks.

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