It's no secret that Starbucks has been struggling to get U.S. customers to frequent its cafes more often. While sales have been positive, the number of customer visits continues to stagnate. Same-store sales, a key metric in the restaurant industry, have dwindled over the last 12 months as competition heated up and customers were uninspired by some of Starbucks' limited-time offerings. While comparable-store sales exceeded expectations in the quarter that ended Sept. 30, rising 4 percent, much of that was due Starbucks charging more for its lattes.
Overexpansion of Starbucks Stores
By the time Starbucks went public in 1992, it had 165 stores, and four years later, Starbucks opened its 1,000th location, including international cafes in Japan and Singapore. Just two years later, Starbucks opened its 2,000th cafe. While unit expansion helped boost sales throughout the last two decades — Starbucks has had positive same-store sales growth since 2010 — it has spread itself too thin. With more than 14,000 locations in the United States alone today, Starbucks is regrouping and rethinking its expansion, and is expected to close 150 underperforming locations in 2019, three times the amount it typically does.
Changing consumer preferences are also an issue which CEO Kevin Johnson has addressed with investors. In 2015, sales of Frappuccinos were 14 percent of Starbucks revenue. However, in the first half of 2018, Frappucino sales were down 3 percent — and accounted for only about 11 percent of the company's revenue. Frappuccino sales were also hurt by a lack of innovation said analysts. CNBC video above published Jan 10, 2019.
By the time Starbucks went public in 1992, it had 165 stores, and four years later, Starbucks opened its 1,000th location, including international cafes in Japan and Singapore. Just two years later, Starbucks opened its 2,000th cafe. While unit expansion helped boost sales throughout the last two decades — Starbucks has had positive same-store sales growth since 2010 — it has spread itself too thin. With more than 14,000 locations in the United States alone today, Starbucks is regrouping and rethinking its expansion, and is expected to close 150 underperforming locations in 2019, three times the amount it typically does.
Changing consumer preferences are also an issue which CEO Kevin Johnson has addressed with investors. In 2015, sales of Frappuccinos were 14 percent of Starbucks revenue. However, in the first half of 2018, Frappucino sales were down 3 percent — and accounted for only about 11 percent of the company's revenue. Frappuccino sales were also hurt by a lack of innovation said analysts. CNBC video above published Jan 10, 2019.
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Listen to the webcast -- a replay of the webcast will be available on the Starbucks Investor Relations website (until end of day Friday, February 22, 2019) -- investor.starbucks.com (investor relations).
UPDATE: Starbucks Reports Q1 Fiscal 2019 Results -- Press Release 01/24/19 highlights below:
- Q1 Consolidated Net Revenues Up 9% to Record $6.6 Billion
- Q1 Comparable Store Sales Up 4% Globally Driven by 4% Growth in the U.S.
- China Comparable Store Sales Up 1% in Q1 and Total China Stores Up 18% Versus Prior Year
- GAAP EPS of $0.61; Non-GAAP EPS of $0.75, Up 15% Year-Over-Year Including Income Tax Favorability
- Active Starbucks RewardsTM Membership in the U.S. Increases 14% Year-Over-Year to 16.3 Million
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| source: statista.com |
Starbucks has a 55% market share of China’s coffee market, however, it faces competition from McDonalds, Costa Coffee, Peets and Luckin, and hundreds of thousands of smaller operators.We are expanding our delivery capabilities in China, equipping 2,000 stores in 30 cities to bring Starbucks right to their doors. Excited to be partnering with Alibaba! $SBUX pic.twitter.com/789adgNlhO— Starbucks News (@Starbucksnews) December 13, 2018
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