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With the technological advancement we have now, smartphones are likely to change coffee shops as we know them, as Dunkin’ Donuts and Starbucks have focused on building the “coffee shop of the future.”

"As we think about what that coffee shop of the future look like… the whole store will be much more focused on mobile ordering," according to Scott Hudler, Dunkin' Donut's chief digital officer.

Despite having no designs yet for Dunkin’ Donuts, Hudler said that both Dunkin’ and Starbucks need to implement some changes and a faster way of fixing bottlenecks as mobile orders are significantly increasing.            

It appears that more than 1% of Dunkin’ Donuts orders came from mobile devices, and over 8% at Starbucks, which is likely more prone to problems.

Starbucks reported transactions in January that its customer traffic declined 2% in the most recent quarter and it appears that problems in mobile ordering contributed to the drop.   

Later at the company’s shareholders conference, executives said that the problems have been fixed and will be adding more staffs at peak hours and tweak the beverage hand-off process to smoothen the chain.

Mobile App Order Fail

Shares of Dunkin’ Donuts rose over 10% this year and 25% over the past 12 months, led by a much better-than-expected earnings and sales that posted an upbeat results, following an all-time high on stocks.   

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In contrary, Starbucks remained flat this year and was outperformed by Dunkin’ over the past year, due to mobile app dilemmas, allowing customers to instantly place and pay orders in advance, making an obvious goal to prevent queues at the counter.  

Meanwhile, Starbucks incoming CEO Kevin Johnson said during an earnings call in January that the success of mobile ordering had a few unintended consequences such as rushed orders with piling advanced orders from customers, making it difficult for baristas to handle.  

Hearing this, Starbucks had no other choice but to deal with the fact that Dunkin’ Donuts, including other rivals like Peet’s, Caribou, Tim Hortons and even McDonald’s are focused on becoming the new king of coffee.

It has been known that Dunkin’ Donuts has been particular on being an aggressive in the coffee wars, wherein it plans to ditch its Coolatta iced coffee beverage into a fancier one, which will be available this summer.

“Frozen Dunkin’ Coffee will offer our guests a more authentic, energizing coffee drinking experience compared to the Coffee Coolatta,” said Chris Fuqua, senior vice president of marketing for global consumer insights & product innovation for Dunkin’ Donuts in a statement.

The chart below illustrates Starbucks price movement after shares hold steady with their mobile app orders that caused bottlenecks on its chains. The stock is currently trading at $57.13 in a light trading volume of 931, which tests resistance 56.89.

Hence, given a bullish tone on the company’s stock, the RSI suggests that the overbought level hasn’t been reached. It could therefore signal that the stock could further rise if it breaks through its nearest resistance.

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Conclusion

As Starbucks shares were seen soaring in today’s session, we can say that stocks could further rally once the price breaks through its nearest resistance, but as of now the price is testing its resistance.

Moreover, as the company started to embrace technological advancement with their mobile ordering strategy, it could give a lift on the stock if the bottlenecks encountered will be addressed properly by adding employees on peak hours.    

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