Searching for future growth, Starbucks recently outlined an ambitious plan to increase U.S. store volume. As the following CNBC story reports, the roadmap goes beyond just offering additional latte choices.
Starbucks may have had a solid fourth quarter, but it’s not resting on its laurels heading into the new year.
The coffee giant, which has nearly 30,000 locations worldwide, held its biennial investor day Thursday, giving analysts and shareholders a glimpse into what is in store for the company in 2019 and beyond. It’s no secret that Starbucks has been struggling to get diners in the U.S. to frequent its cafes. While sales have been positive, foot traffic continues to stagnate.
Same-store sales, a key metric in the restaurant industry, have dwindled over the last year as customers have balked at some of Starbucks’ limited-time offerings. Comparable-store sales exceeded expectations in the latest period, rising 4 percent, but much of that was due Starbucks charging more for its lattes.
To remedy Starbucks’ sales woes, the company has shifted its strategy more towards cold beverages, which make up the majority of customer orders, and have sought to be more discerning in where it opens new stores. Starbucks executives told investors Thursday that the company plans to continue leveraging its strong digital presence and growing loyalty members as well as work with crew members to make the Starbucks environment more hospitable.
Starbucks looks to further upsell customers with items such as hand-crafted beverages, especially cold brew coffee, and food items. A just-announced delivery service is really keeping up with QSRs and fast-casual chains, so this is now table stakes. Starbucks’ mobile app is already among the best in class, so they continue to leverage it to drive higher tickets. Meanwhile, Starbucks is going very upscale with its 2nd U.S. Roastery, a newly opened, 23,000 sq. ft. mega café in Manhattan that also serves custom cocktails. Its acquisition of Milan-based Princi Bakery will provide more premium offerings to U.S. customers. Starbucks continues to move beyond the coffee bean into new customer segments and 2019 shapes up as a key year to impact its future growth.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group
