Starbucks tests cashless store as more customers buy coffee with their phones

  • Starbucks is testing a cashless store to better understand how digital and credit card payments affect customer behavior and experience.
  • The company added 1.4 million Starbucks Rewards members in the U.S. in the last quarter, raising its total number to 14.2 million.
  • The coffee giant is working on a way to reach non-Rewards members in the digital arena, including making mobile order and pay available to all customers in March.

No cash, no problem. At least at one Starbucks location in Seattle.

The coffee giant is testing a cashless store "just to see" how digital and credit card payments affect customer behavior and experience at the restaurant.

"Thirty percent of our payments in the United States [are] done with a mobile phone," CEO Kevin Johnson said on CNBC's "Squawk on the Street" Friday. "Over 40 percent is done with phones and Star Value cards with rewards. In China, over 60 percent of our tenders come from mobile payments."

As more and more Starbucks customers pay for their coffees with their phones, the company must work to accommodate this behavior and leverage mobile ordering and digital marketing to increase the number of times consumers visit the coffee shop.

Starbucks said it added 1.4 million Starbucks Rewards members in the U.S. in the last quarter, raising its total number of members to 14.2 million.

Starbucks isn't the only company to be testing out cashless locations. In October, Shake Shack announced that it was building a cashless, kiosk-only location in New York City to test out a variety of digital innovations and ways of connecting with its consumers.

The cashless location is just one piece of Starbucks' digital innovation this year. Johnson said during an earnings call Thursday that the company is working on a way to reach non-Rewards members in the digital arena, including making mobile order and pay available to all customers in March.

"Virtually all of our comp came from our digital customers," Matt Ryan, global chief strategy officer for Starbucks, said on the call. "We are going to be targeting not just the Starbucks Rewards customers, but all customers with ways for them to sign up and engage with us directly. That will create a new pool of customers that we can use our marketing capabilities to reach and talk to and build business from."