Starbucks Now Catering To Late-Night Coffee Drinkers

Since it first became America's morning ritual decades ago, Starbucks has broadened its reach into categories beyond coffee, from Refreshers to potato chips to fancy casserole bites. Now, as company leadership announced in its most recent earnings call, Starbucks will try to reach customers later into the evening, too, thanks to a pilot program with Gopuff.

Starbucks is partnering with Gopuff, a grocery and convenience food delivery service, to explore its potential late-night coffee drinker demographic. As part of the test, Starbucks will coordinate delivery orders between the hours of 5 p.m. and 5 a.m. through Gopuff's service.

"We saw record results in a U.S. delivery business with growth of nearly 80% year-over-year, aided by our expanded partnership with DoorDash," said Starbucks CEO Laxman Narasimhan on the earnings call. "In this pilot [with Gopuff], Starbucks trained baristas prepare handcrafted Starbucks drinks and food inside Gopuff micro-fulfillment centers, delivering to the customer's door in about 30 minutes."

The pilot has actually been running since October but strictly in Philadelphia, per an announcement from Gopuff. Customers in Old City, Northern Liberties, Fairmount, University City, and the majority of Center City have the option to order from the Starbucks menu via Gopuff. When the program first launched, customers could even order the seasonal offerings from Starbucks like the Pumpkin Spice Latter and Pumpkin Cream Cold Brew.

Narasimhan also noted on the call that delivery accounts for 2% of all of the brand's transactions, which makes it an avenue ripe for growth. However, delivery isn't the only reason Starbucks might want to open itself up to night owls.

Recent foot traffic data from Placer.ai has shown breakfast may not be the cash cow it once was to the fast food industry; the analytics firm's report shows McDonald's and Chipotle customers trending toward later-in-the day visits. Setting aside Chipotle, which is not known for having a breakfast menu, McDonald's saw 21.2% of its customers come in from 7 p.m. to 10 p.m. in 2023, a significant increase from 18.8% in 2019. Meanwhile, 16.7% of McDonald's customers came in from 7 a.m. to 10 a.m., a decline from 18% in 2019.

Another compelling reason for Starbucks to sell to a late-night crowd? Restaurant software company Toast has data to suggest that the traditional "work lunch" could also be dying. Toast found weekday lunch transactions in 19 of the biggest U.S. cities were down in the first quarter of 2023 compared to 2019. In Chicago and New York City, lunch traffic was down 23%, and in Los Angeles it was down by 16%.

Starbucks has not released any further information on when or where it will be conducting the delivery test with Gopuff. But based on these industry-wide trends, banking on nocturnal customers is a savvy move. Stressed-out college students and tired third-shift workers might finally be able to get their preferred caffeine jolt at 2 a.m. instead of opting for the gas station brews.