Co-opetition is nothing new to customer loyalty; the current zeitgeist calls for such. The intrinsic benefit that can be derived from the combined entities outweighs distinct company attributes, but managing the efficacy can be challenging.
Now, Starbucks has announced that it will license its in-house digital technology (i.e., the Starbucks app) to Brightloom, a startup that sells cloud-based software to the restaurant industry. This means that restaurants will have access to a platform that enables mobile payment by scanning, as well as loyalty reward and personalization programs, via the Starbucks app.
Brightloom is headed by CEO Adam Brotman, the former Chief Digital Officer for Starbucks. The two companies’ combined technologies will first be used to help Starbucks licensees that do not yet offer the brand’s complete digital experience. From there, the tool will be made available to the entire restaurant industry, Starbucks’ rivals and all.
Of this issue, Paytronix President Andrew Robbins says, “The restaurant technology landscape is changing rapidly, and consumers are demanding a frictionless, convenient experience. Starbucks has developed a strong technology platform for its restaurants with multiple partners over many years. This hybrid make-buy technology model may be the best of both worlds for them. The challenge will be balancing Starbucks’ feature needs with that of the industry at large to build an easy-to-use and flexible platform.”
On Starbucks’ part, this move resembles Amazon’s decision to make its platform available to businesses as Amazon Web Services. That move drove significant growth for the e-commerce giant. We should anticipate similar growth for Starbucks and Brightloom.
Loyalty360’s CEO Mark Johnson says of the partnership, “Starbucks is a logo we see in many of the RFI responses we receive. If you take that on its merits, there are a significant number of technology providers that supply Starbucks with best-of-breed technology, which is then packaged together in a technology stack that is world class. Still, I think there could be potential challenges regarding who has access to the data, the intellectual property, etc. But on the surface, this seems to be compelling and very consistent in the industry and in times of consolidation and co-opetition.”
This development is also in keeping with a broader trend in the restaurant industry. Increasingly, the lines between restaurant brands and tech companies are becoming blurred. Earlier this year, McDonald’s acquired the data firm Dynamic Yield and then took a minority stake in mobile app vendor Plexure. Yum Brands has invested heavily in GrubHub, and Pizza Hut (a Yum Brands subsidiary) purchased online ordering company QuikOrder.
New technologies such as these provide numerous opportunities for businesses. Many brands bring technologies in-house to form centers of excellence. Then, they can design those technologies to have attributes that enhance their missions and give them cost and feature control as well.
This trend addresses challenges that we have seen emerge in our conversations with brand representatives (interviews with Jersey Mike’s being one example). Bringing tech in-house can help service issues inherent in working with a delivery service, such as problems surrounding customer ownership. When there are service issues, in-house tech can also solve communication problems with the customer or conflicts arising when two entities are involved.
Amy Hunt, Vice President of Strategic Consulting for Epsilon, says of this tech-focused environment, “It’s an exciting time for the restaurant category with the increased focus on technology and the benefits it can provide to improve personalization, efficiency, and value for customers. Centralizing technology allows for an increased ability to leverage AI and machine learning to improve marketing program personalization.”
This kind of environment means that Brightloom’s offering will not be wholly unprecedented. Many vendors currently offer brands mobile ordering or personalized loyalty. However, Brightloom is pitching the Starbucks tech as an end-to-end solution for restaurants, and the high reputation of the Starbucks app will prove enticing to brands.
Presently, only about 3 percent of restaurant orders are purchased digitally. Less than a third of US restaurants currently offer mobile payment. But customer expectations and behaviors change faster than industries do, and many in the space will be eager to offer such services.