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Starbucks Corporation (SBUX - Analyst Report) recently announced plans to update its mobile app for Apple, Inc.’s (AAPL - Analyst Report) iPhone to include a digital tipping feature that will allow customers to leave tips at Strabucks baristas from the app.

Also, the company has included a new feature “Shake to Pay” to simplify mobile payments. The enhanced app will be available from Mar 19.

Nearly 11% of all transactions in a week in Starbucks’ U.S. stores take place through smartphones.  With almost 10 million customers currently using Starbucks mobile app, the app update will definitely improve customers’ digital experience.

The recent iPhone app update is part of CEO Howard Schultz’s plan to focus more on leveraging Starbucks’ mobile and digital assets and loyalty and e-Commerce platforms to create more revenue streams.

Starbucks effectively uses social/digital media to drive customer awareness and thereby, improve traffic flow. A large number of its customers are opting for Starbucks card as the preferred mode of payment which bodes well for the company’s future growth.

Starbucks’ loyalty cards are gaining popularity and at present, nearly one-third of all the U.S. transactions are made by My Starbucks Rewards loyalty members. Together, mobile and Starbucks card payments represent over 30% of the total U.S. payments. At the end of first-quarter 2014, the company had 7 million active members in the U.S.

The company is also witnessing an increased usage of My Starbucks Rewards in countries outside the U.S. like China, Korea and Canada. With the Jan 2014 launch of Starbucks gift card in China, these cards are now available in 28 countries.

Further, the company is trying to broaden the reach of the Starbucks loyalty and mobile platform to its channel development business and emerging brands. Starbucks customers can now earn reward points under My Starbucks Rewards loyalty program on purchase of packaged coffee at its grocery channels.

Further, customers can now use Starbucks cards as well as Starbucks mobile application at all Teavana stores and redeem stars for Evolution Fresh juices and other bottled Starbucks ready-to-drink beverages bought at Starbucks stores.

Other Stocks to Consider

Starbucks carries a Zacks Rank #3 (Hold). Better-ranked stocks in the retail-restaurants sector include The Wendy's Co. (WEN - Analyst Report) and Buffalo Wild Wings Inc. (BWLD - Analyst Report). While Wendy's enjoys a Zacks Rank #1 (Strong Buy), Buffalo Wild Wings holds a Zacks Rank #2 (Buy).

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