Starbucks Says Mobile Payments Gaining

Starbucks Corp., seeking ways to find new customers and keep current ones loyal, said its mobile-payment application has been gaining traction and that it plans to open more Teavana tea shops.

Mobile payment now accounts for 14 percent of in-store transactions in the U.S., the Seattle-based company said today in a statement, up from a 10 percent rate disclosed in July. Starbucks also said it will open at least 20 additional Teavana stores in the current fiscal year.

Chief Executive Officer Howard Schultz has been focused on expanding and improving Starbucks’ rewards program and mobile applications, as well as selling more juice, tea and food to stoke growth. Starbucks earlier this month said it would test a smartphone app this year that would allow customers to order ahead of time at some U.S. stores.

“Mobile is very important,” Peter Saleh, a New York-based analyst at Telsey Advisory Group, said in a phone interview. “The companies that are taking share are the companies that have some mobile, digital platform -- Papa John’s, Domino’s, Starbucks, Dunkin’.”

Starbucks rose 1.8 percent to $75.91 at the close in New York. The shares have dropped 3.2 percent this year, compared with a 0.7 percent increase for the Standard & Poor’s 500 Index.

The company’s loyalty program entices diners with free beverages, food and refills after earning and accumulating points from purchases. Customers can pay with mobile phones, linked to their loyalty account or with a Starbucks card that also can be linked to their account.

Oprah Winfrey

Starbucks and Teavana stores in the U.S. and Canada will begin selling Oprah Winfrey-branded chai tea on April 29, Schultz said at the company’s annual meeting today. The media entrepreneur tasted different tea varieties and helped Starbucks create the blend, which includes black and rooibos teas.

“This felt like something that I really loved, that I really cared about,” Winfrey told Schultz at the meeting. Starbucks will donate money from the tea’s sales to charities that support youth education.

Starbucks bought Teavana Holdings Inc. last year in a transaction valued at about $626 million. It has since been expanding the brand and plans to open tea bars in Chicago and Los Angeles this fiscal year.

The company has more than 20,100 locations worldwide, including about 11,500 in the U.S.

Before it's here, it's on the Bloomberg Terminal.