One Wall Street analyst contends lower-paying guests at Starbucks will shift to Dunkin' Donuts to earn rewards
This post is part of the Reporter's Notebook blog.
Starbucks Corp.’s plan to change the structure of its My Starbucks Rewards loyalty program will help big spenders at the coffeehouse chain earn rewards more quickly.
The change, which goes into effect in April for stores in the U.S., Canada and Puerto Rico, will allow guests to earn two stars for every dollar spent, as opposed to the current system in which guests earn a star with every transaction, regardless of how much they spend.
But those penny-pinching customers who love accumulating their stars even with the smallest of purchases may find they’re not earning their freebies at quite the same pace under the new program.
At least one Wall Street analyst thinks the change in structure will send some low-paying Starbucks customers into the arms of Dunkin’ Donuts.
Stephen Anderson of Maxim Group, said in a report Monday that Dunkin’ Donuts’ DDPerks loyalty program is more attractive because it awards five points for every dollar spent. DDPerks members get a free drink at signup, and they only have to earn 200 points, which means spending about $40, to earn the next free beverage.
“Given the lower dollar threshold for the DDPerks program, we believe that some Starbucks customers – particularly lower-dollar transaction customers – may shift their ordering preferences to Dunkin’ Donuts in the new few quarters,” he said.
He estimates that the average Starbucks customer who spends $2.19 for a medium coffee in the Northeast, where Dunkin’ Donuts competes with Starbucks, will need to make 29 visits before earning a reward. The average Dunkin’ Donuts customer, meanwhile, who spends $2 for a medium coffee will need to make on 20 visits before earning a similar reward, he said.
On Twitter, it appeared some customers agreed.
But if Starbucks’ new-and-improved loyalty program attracts more in the way of Big Ticket customers, will they really miss those pissed off penny pinchers?