Starbucks Korea has temporarily added morning discount benefits to its paid subscription service, Buddy Pass. The move expands an existing discount structure focused on afternoons to include mornings, in a strategy seen as strengthening its membership policy as low-priced coffee brands such as Mega Coffee and Compose Coffee expand.

According to the industry on Monday, Starbucks will run a service offering Buddy Pass users an additional 15 percent discount coupon for made-to-order drinks in the morning from this month through May 20. Buddy Pass is Starbucks Korea's paid subscription service and has offered discount coupons for made-to-order drinks that can be used after 2 p.m.

This time, it has temporarily added a 15 percent discount coupon for made-to-order drinks for the morning period as well. It has expanded the scope of discounts to commuting hours when demand from office workers and students is concentrated. One 15 percent discount coupon for made-to-order drinks will be provided each day even before 2 p.m.

Starbucks' move into morning discounts is seen as targeting demand in a time slot where low-priced coffee brands have increased their dominance. As low-priced brands such as Mega Coffee absorb takeaway demand on the way to work with value-for-money offerings, Starbucks is also seen as joining the competition for morning demand through discount coupons.

The discount rate is limited to 15 percent. This is interpreted as strengthening its subscription benefits while avoiding conflicts by setting a lower discount rate than existing partnered products. Starbucks Korea operates a paid subscription scheme, T Universe Pass, in partnership with SK Telecom. It is seen as setting the Buddy Pass morning discount at 15 percent, below the 20 percent discount offered through T Universe Pass membership.

The expanded discounts are also seen as linked to conditions in the domestic coffee franchise market, where low-priced brands have recently stepped up their offensive. According to the Financial Supervisory Service's electronic disclosure system, Starbucks Korea's sales last year rose 4.4 percent from a year earlier to 3.238 trillion won, but operating profit fell 9.3 percent to 173.0 billion won. Against that trend, Starbucks is seen as aiming for both customer inflow and repeat visits through subscription services and time-based discount strategies.

Competition among domestic coffee franchises is also intensifying. Low-priced coffee brands such as Mega Coffee, Compose Coffee and Paik's Coffee have rapidly expanded their scale on accessibility and price competitiveness. Mega Coffee, the coffee franchise with the most stores in South Korea, had more than 4,000 outlets at the end of last year, while Compose Coffee operates about 3,100 stores. That is well above Starbucks' roughly 2,100 stores.

Also, according to Wiseapp-Retail, coffee franchises accounted for a large share of food and beverage retail purchases by South Korean credit and debit card users over the past six months from September last year to February this year. Starbucks ranked No. 1 by payment amount, while Mega MGC Coffee had the highest monthly average number of payments at 36 million.

Starbucks has expanded its Rewards member base and has recently been widening customer touchpoints using subscription services and memberships. Starbucks Korea is also expanding subscription and membership-based customer management, including discounts for university students and benefits for people in their 20s. It is doing so by segmenting benefits by customer characteristics such as price, time period and age group.

Starbucks began a pilot run of its service for people in their 20s, called Dear Twenty, on March 26 for those aged 19 to 29 based on birth year. According to Starbucks Korea, people in their 20s were the age group with the biggest increase among new Starbucks Rewards members over the past year. The group was found to have the most segmented beverage preferences, including decaffeinated coffee and tea lattes. It was also analysed as having the most active changes in routes, including around university districts, private academy areas, offices and shopping malls.

Since September 2024, it has also operated a free membership programme, Campus Buddy, offering discount and free coupons to Starbucks Rewards members who are university and graduate students nationwide and have been issued a KakaoTalk student ID. Starbucks said cumulative sign-ups for the free membership stood at 630,000 as of the end of last month.

A Starbucks Korea official said, "We are providing benefits and services to loyal customers who visit Starbucks often, such as Buddy Pass." The official added, "We plan to continue reflecting customers' diverse usage patterns and needs to broaden choices and strengthen benefits."