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Starbucks May Battle Mickey D’s with Loyalty Program

Feeling the pinch of the economy and encroaching low-cost providers such as McDonalds, Starbucks may start a loyalty program to bolster U.S. sales.

CEO Howard Schultz, the brand builder who recently returned from a seven-year break, may introduce the plan at a shareholders meeting today. It’s expected that the loyalty program will include free coffee offers and/or discounts to customers using prepaid Starbucks cards. The company may also offer food/drink combos, reported Bloomberg. The discount plan for its truest customers would dovetail with Starbucks’ plan to boost sales at existing 16,000 shops while opening fewer new cafes.

Accepting that $4 coffee drinks are a losable luxury in current slow times, Starbucks is considering several new initiatives, including focusing on drip coffee, a cheaper pour than its fancier latte compatriots. Last month, the company took the bold step of closing all its U.S. locations during business hours to train baristas, a move which confused some consumers and gave Dunkin’ Donuts an opening to tout $0.99 lattes.

Starbucks, which will need to tread lightly to avoid tarnishing its premium brand status, saw its first-quarter sales growth slow 17 percent, the smallest gain in two years.