Starbucks has changed the terms of its rewards program so that people who spend around $5 or less per visit won't get as many freebies.
Changes to the loyalty program took effect Tuesday. According to the Seattle-based coffee chain, stars are now awarded based on dollars spent instead of number of visits. Members receive two stars per $1 spent, as opposed to one star per purchase.
Under the new program, free rewards could be harder to come by — customers will now have to earn 125 stars for a free item, meaning they have to spend $62.50. Previously, free rewards were available to customers with 12 stars.
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That means people who stick with options like plain coffee are losing out.
For instance, someone who regularly pays $2 for a regular drip coffee would currently earn a free item after spending around $24 over 12 visits. Under the new system, they would have to visit more than 31 times before they earn the perk.
Someone who gets a large latte for $4.45 currently spends around $53.40 over a dozen visits before getting a free item. That person would need to visit a couple extra times for the freebie with the new system.
In an email to customers Tuesday, Starbucks said members' existing star balance was multiplied by 11 to account for the new system.
Starbucks Corp. said the change is the No. 1 request among loyalty program members and predicts it will lead to higher spending by customers eager to earn more stars.
In a call with analysts when the new program was announced in February, Starbucks Chief Strategy Officer Matthew Ryan said the vast majority of customers will earn rewards at an equal or better rate with the change. Without providing details, he said a "small minority" of customers will earn rewards at a slower pace.
The change is not an opportunity to opaquely reduce the value of the program, Ryan said.
The old rewards system also increased waiting times in store lines, Ryan said, because some people tried to get additional stars by asking to ring up multiple items separately. Such instances accounted for 1 percent of all transactions, he said.
The change comes as Starbucks has been pushing to get more people signed up for its My Starbucks Rewards program. Loyalty members spend three times as much as non-members, and help push up profit, according to the company.
At the beginning of the year, Starbucks said it had 11.1 million loyalty program members in the U.S., up 23 percent from the previous year.