Do you want an NFT with your latte from Starbucks? The coffee giant revealed this week its ambitions to join the web3 area later this year with the introduction of its own NFT collection, where the unique digital treasures would also give its owners with access to special content experiences and other perks, it claimed.
On its fiscal Q2 2022 earnings call, the firm emphasised its ambitions to investors, outlining how NFTs may help Starbucks spread its brand’s notion of the “third place” – a space between home and work where people can experience a sense of belonging over coffee.
“Emerging technologies connected with web3, particularly NFTs, now enable this vision and allow us to enhance who Starbucks has always been at its heart,” Starbucks Chief Marketing Officer Brady Brewer told investors during the call. “We are establishing a digital third place.” To do this, we will widen our framework of what it means to be a member of the Starbucks community by including new notions like as ownership and community-based membership models that we see forming in the web3 sector,” he said.
The firm stated that it will create its NFT community on a “environmentally sustainable” web3 platform, which would be more in line with its previous sustainability objectives. However, the business did not specify what type of blockchain technology will be used in their NFT collections, just that it would be “multi-chain” or “chain agnostic.”
While Starbucks was tight-lipped about what its first set of NFTs would look like, who would design them, and what kind of membership features they’d offer, it did explain in a subsequent blog post that it sees the potential to create an accretive business adjacent to its stores where digital collectibles aren’t just bought and sold speculatively, but also serve as an access pass providing customers with special experiences and perks.
“We want to launch our first NFT collection, membership, and community focused on coffee art and narrative later this year.” It will include a slew of one-of-a-kind experiences and rewards befitting of a Starbucks genesis NFT collection,” according to the article. According to the firm, this collection will then serve as the foundation for future collections and collaborations in the web3 community.
While some companies enter the NFT market without giving any attention to how the technology fits into their bigger business strategies, Starbucks looks to be taking a different route. It has hired Adam Brotman, the creator of its Mobile Order & Pay system and the Starbucks app, to act as a special advisor on the project.
Notably, the company said it’s also looking for a new CEO who understands the potential of these new technologies, according to current interim CEO Howard Schultz. The longtime exec had returned to head the coffee chain — now undergoing a unionization push — following the departure of Kevin Johnson, who had served as CEO since 2017.
In addition to having a solid understanding of the Starbucks brand and global experience, he said the new CEO should have an understanding of web3 technologies, as they could help Starbucks better connect with younger people. The NFTs could also provide a way to create incremental traffic and revenue, not only in terms of retail, but also incremental revenue as a result of its own business, the exec added.
“I think the next CEO is going to be a creative person who’s going to understand that the equity of the Starbucks brand has real legitimacy and relevance outside of our stores. And the world we’re living in today, our customer base is getting younger, they’re digital natives, and they expect Starbucks to be as relevant outside of our stores as we are inside,” Schultz explained. “…the new CEO, obviously, needs to have an understanding and a grasp and a conviction on the fact that we can play in multiple theaters that could be accretive on their own merit and complementary to our retail business,” he said.
Investors didn’t ask many questions related to Starbucks’ new NFT venture, instead focusing on learning more about higher-level business impacts like the unionization efforts, the suspension of share buybacks and the situation in China, among other things.
It’s not surprising that Starbucks would be willing to experiment in the NFT space, though, given the company has made a name for itself as being ahead of the curve when it comes to the embrace of new technologies. Its mobile payments system, for example, helped pioneer the idea of using a phone to pay for orders well before Apple Pay and other NFC-based tap-to-pay checkout experiences were broadly available. Today, Mobile Order & Pay is a more than $4 billion business, Starbucks said, up 400% in five years and up 20% over last year. Starbucks said it’s now working to roll out enhanced digital tipping so customers could tip even when they weren’t paying with their Starbucks card.
Despite losses in China owing to new COVID lockdowns, the coffee giant surpassed its Q2 revenue projections, with $7.64 billion vs $7.6 billion predicted, and profits per share of 59 cents adjusted, in line with expectations. Net income for the second quarter was $674.5 million, or 58 cents per share, up from $659.4 million, or 56 cents per share, in the previous period.
The corporation did not provide a prognosis for the next quarters, citing a variety of issues such as China, inflation, and expenditures in shops and workers.