Will Dunkin's mobile ordering expansion challenge Starbucks?

Dive Brief:

Dunkin' expanded its On-The-Go mobile ordering feature to all of its customers instead of limiting the service to its DD Perks Rewards members, according to a company press release.
The guest order feature is part of a Dunkin' app update, which includes a new design and streamlined customer experience. DD Perks members can still earn and track rewards points and redeem them for free drinks or beverages.
In October, Dunkin' will offer DD Perks members points for every eligible purchase regardless of how they pay, including cash, credit, debit or a Dunkin' gift card.

Dive Insight:

Launching mobile ordering app-wide will play into consumers’ continued hunger for convenience-focused and tech-backed ways to purchase food from restaurants. It may also help convert infrequent app users to its rewards program, which currently consists of 12 million members, and further foster consumer loyalty in the competitive coffee chain segment.

The chain appears to be keeping close tabs on what its consumer base wants. During a Q1 call in May, CEO Dave Hoffmann highlighted the company’s digital offerings, stating that the brand believes it has "tapped into a much more savvy digital consumer than what [it] had before."

Dunkin' is adopting a few other measures to make it easier for consumers to place orders. It launched a multi-tender option for its loyalty program in April, for example, and unveiled voice-activated ordering last year. It also adopted geofencing via Grubhub to optimize its New York City delivery offerings.

Like many restaurant segments, coffee chains seem to be in a steadfast race to see who can fulfill customer orders the quickest. Dunkin' has some stiff competition from rivals like Peet's Coffee, which expanded its mobile order ahead service in April, and Starbucks, which has one of the top-performing loyalty programs and mobile apps. Starbucks also just launched voice ordering with Alibaba in China, where Luckin is gaining market share.

Starbucks is hard at work making its loyalty program more appealing to a broader audience. It updated its rewards program in April to allow customers more flexibility when redeeming rewards and eliminating its two-tiered green and gold structure to allow a larger audience to have a better chance at reaching rewards faster.

Despite initial criticism by existing rewards members, Starbucks grew its rewards program to 17.2 million active members during the third quarter ending June 30, with 90-day active rewards members increasing 14% year-over-year, according to a call with investors. These efforts paid off. The growth and updates to the rewards program, as well as new mobile order and pay options and personalized marketing, contributed 2% of comp sales growth during the quarter as well.

While Dunkin' has a ways to go to catch up to Starbucks' rewards program, expanding its mobile app capabilities will only push it in the right direction — one the could start pulling customers away from Starbucks.