SBUX Starbucks Corporation

By Julie Jargon 

Starbucks Corp. on Wednesday said customers using its new branded prepaid Visa cards would be able to earn points for free coffee and other perks.

The company outlined its latest plans to expand its rewards system beyond its own coffee shops during its annual shareholders meeting in Seattle. The Starbucks prepaid cards would be able to be used at any retailer that accepts Visa cards.

The Starbucks prepaid Visa card, which is expected to be available by the end of the year, will allow card holders to earn "stars" for all purchases made on the card. Those stars can then be redeemed at Starbucks cafes. Customers will be able to apply for the card through the Starbucks mobile app or on its website.

"This is just the beginning," Starbucks President and Chief Operating Officer Kevin Johnson said at the meeting. "We intend to open up our digital ecosystem to more payment options."

Restaurants and retailers in an increasingly competitive environment are vying to establish repeat customers, and Starbucks has made its loyalty program a central part of its growth strategy. Even fast food chains are jumping on the bandwagon. McDonald's Corp. recently said it plans to develop a loyalty program later this year or early next.

The company's annual meeting got off to a rocky start after a bogus news release was issued by a labor group early Wednesday morning claiming the meeting had been rescheduled on short notice. The prank, orchestrated by Working Washington, a union-backed nonprofit that's pushed for minimum wage increases in Washington, was intended to demonstrate the difficulty workers face when dealing with unpredictable work hours.

The Seattle-based group, under the guise of "SBUX Shareholder" sent an email to reporters later in the day explaining that, "shareholders and executives got to imagine what it might be like if the Starbucks Corporation treated everyone's time like they do baristas' time in many of their stores--with on-demand, ever-changing schedules." A spokesman for Working Washington confirmed the group was behind the hoax.

The meeting ended on a high note with a performance by Alicia Keys, in keeping with Starbucks' tradition of showcasing big-name performers at its annual meetings.

Starbucks last month announced it is changing its loyalty program to reward customers based on how much they spend rather than how frequently they make purchases. Under the new system, which takes effect in April, customers will earn two rewards points, or "stars," for every dollar spent, rather than one star for each transaction, a move that caused a bit of a social media uproar among customers who place small orders.

"The intent behind it was to level the playing field for our customers," Mr. Johnson said.

Since the announcement, more than 500,000 customers signed up for the program.

Starbucks has been seeking other ways to draw in people who may not already be customers. The coffee chain has teamed up with music-streaming service Spotify and ride-sharing service Lyft Inc. to allow those customers to get reward points that can be redeemed at Starbucks.

During the annual meeting, Starbucks also announced plans to introduce its Teavana brand of teas to its cafes across Asia, Europe, the Middle East and Africa by the end of the fiscal year. Starbucks acquired the tea retailer in 2012.

In the U.S., Starbucks this summer plans to roll out a new ready-to-drink cold brew coffee in some supermarkets and Starbucks cafes.

The company also said it has reached an updated agreement with Keurig Green Mountain Inc. to continue to be the supplier of Starbucks K-cups. After Keurig in December announced it would be acquired by JAB Holding, it wasn't clear whether Keurig would keep making Starbucks K-cups for use in its single-serve brewers or whether Starbucks would begin doing so on its own. Starbucks plans to launch a line of K-cup lattes this summer in the U.S.

Write to Julie Jargon at julie.jargon@wsj.com

(END) Dow Jones Newswires

March 23, 2016 16:06 ET (20:06 GMT)

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