DoorDash (DASH) – Get Free Report shares jumped higher Tuesday after the group unveiled plans to expand its delivery partnership with Starbucks (SBUX) – Get Free Report nationwide over the next three months.
Starbucks and DoorDash said they plan to expand their delivery service to all fifty U.S. states by the end of the first quarter, beginning with the launches in Northern California, Texas, Georgia and Florida.
The expanded partnership could counter the impact of Amazon’s (AMZN) – Get Free Report potential purchase of a 15% stake in Grubhub, the U.S. division of Europe’s Just Eat Takeaway (TKAYF) if their newly-unveiled promotion — which includes free delivery for orders over $12 in the 4,000 cities that Grubhub operates — attracts enough customers for the online retailer.
Starbucks, meanwhile, may be looking to offset the impact of slowing China sales, where the country’s Covid crisis lead to the weakest annual GDP growth in more than five decades last year, by building on solid U.S. sales and adapting to changing work and commuting patterns in the post-pandemic economy.
“As customer behaviors evolve, we continue to innovate the Starbucks Experience to connect with them through meaningful and valuable digital experiences,” said Starbucks senior vice president Brooke O’Berry. “Our partnership with DoorDash allows us to provide our customers with another convenient way to enjoy Starbucks wherever they are.
“Delivery continues to be a significant growth opportunity for Starbucks, and we’re excited to reach more customers by partnering with DoorDash, a company known for their best-in-class service,” she added.
DoorDash shares were marked 2.7% higher in pre-market trading following news of the expanded partnership to indicate an opening bell price of $53.75 each. Starbucks shares, meanwhile slipped 0.34% to $106.87 each.
Starbucks said in November that U.S. comparable sales were up 11% over the three months ending in September, the group’s fiscal fourth quarter, helping overall revenues rise 3.1% to a Street-beating $8.4 billion and daily store traffic was around 95% of pre-pandemic levels.
Non-GAAP earnings fell 19% to 81 cents per share, but topped Street forecasts thanks in part to “elevated pricing actions taken throughout the year”.
“W anticipate the current COVID-related uncertainty to continue and repeat that while our long-term aspirations for China remain undiminished, we expect the recovery of our business in the country to be nonlinear,” said interim CEO Howard Schulz.