Dive Brief:
- Starbucks is adjusting its terms for how its loyalty customers can redeem stars for drinks and food items, effective Feb. 13, the company wrote in an email to Restaurant Dive.
- According to Starbucks’ updated terms of use, customers will need a minimum of 100 stars to redeem a free hot coffee or tea, bakery item or snack — double the current 50 stars required. Other items, such as packaged coffee, can now be redeemed with fewer points.
- Starbucks Rewards members grew to about 29 million at the end of fiscal 2022, about a 5% jump from fiscal Q3, according to the company’s most recent earnings release.
Dive Insight:
This marks the first major change Starbucks has made to its loyalty program in over two years. In 2020, Starbucks added various payment options for rewards members to earn stars, including scanning their app and then paying with cash, credit/debit cards and other mobile payment options.
While that update expanded the program, giving Starbucks customers more ways to earn stars, the impending February change will shift how customers can redeem stars. The program now includes just , 25-, 100-, 200-, 300- and 400-star tiers compared to the current model, which has tiers that include 25, 50, 150, 200 and 400 stars.
While the reward minimum to earn a basic hot drink and pastry increased, the company decreased the reward cost of several items. An iced coffee or iced tea, for example, currently costs 150 stars, but will cost 100 stars under the update, the company said. Packaged coffee also currently costs 400 stars, but will be reduced to 300 stars with the update.
The company will keep its 25-star reward allowing for customers to redeem a free ingredient upgrade, while 400 stars will allow customers to redeem for various merchandise up to $20. Customers will still be able to earn bonus stars on Double Star Days and other benefits like a free birthday reward and free refills with the Reusable Cup Benefit will remain in place, Starbucks said.
Customers will still accrue stars the same way, earning one star for every $1 spent or two stars per $1 if using a pre-loaded card or physical card. Starbucks said it informed U.S. and Canada customers of these changes on Wednesday.
“We occasionally need to make changes to ensure the long-term sustainability of the Starbucks Rewards program and to meet the changing needs of our members,” a Starbucks spokesperson wrote.
This pivot could be risky for Starbucks. Dunkin’ loyalists were angered following the coffee and doughnut chain’s loyalty program updates, which also increased the minimum rewards needed to receive a free coffee. Starbucks Rewards makes up a significant portion of the company’s sales volume, as well. In fiscal Q4 2022, rewards members drove 55% of sales across company-operated locations, Howard Schultz, Starbucks’ interim CEO, said during the company’s November earnings call.
The company has been looking to grow its rewards platform further, launching its Reward Together program earlier this year to link leading brands’ loyalty programs with Starbucks’ star offering, Schultz said. Its first such partnership was with Delta Airlines. The chain also launched its Starbucks Odyssey NFT program earlier in December, which allows reward members to participate in interactive challenges to win NFTs and bonus points that go toward overall rewards.
