Starbucks 3Q22 Commentary

Aug 10, 2022 | Bubble Monitor, No Bull Economics


Executive Summary: Starbucks reported a strong +9% increase in same-store sales for the quarter, including an +8% increase in average ticket (which reached an all-time high) and corporate reported no measurable reduction in customer spending or trade-down. Menu prices increased +5% over the last 12 months although traffic is down double-digits since 2019 levels which reflects that people are no longer going into the office every day. In any case, corporate expects the morning daypart to come “roaring back”.

Quarterly results were driven by huge growth in cold beverages (a favorite of Gen Z) and a +19% increase in food sales. Cold beverages now account for 75% of total beverage sales in U.S. company stores and its Iced Espresso platform grew +50% y/y, creating new customer occasions in the midday & afternoon dayparts. Gen Z is choosing modifiers to add to their beverages which are raising the ticket while producing color & excitement which they are highlighting on social media.

Notably, Wendy’s recently indicated that more people are either working from home or eating at the house and then grabbing a beverage on the way to the office. This is helping C-store beverage sales & business for the traditional coffee houses. 

Active Starbucks Rewards membership grew +13% y/y to 27.4MM members & loyal Starbucks Rewards members drove a record 53% of U.S. company store revenue. Mobile Order & Pay, drive-through, and delivery drove 72% of total U.S. revenue.

Starbucks Financials Graph

Follow us on LinkedInTwitterFacebook, and YouTube!

Disclaimer of Liability
Restaurant Research

Email Sign-up

15 Second Posts

What is the Federal Government’s Job?

A couple of weeks ago we conducted a thought experiment in which the government became a nonprofit, and this week we propose another thought experiment in which the government becomes a public corporation. We suggest that this could provide very useful input into the debt ceiling debate.

The Importance of the Balance Sheet in Financial Analysis

While most investors are focused on sales growth & margins, they would be well served to further consider the strength of a company’s balance sheet. We look at BlackRock’s financial condition as an illustrative point.

The Importance of Free Cash Flow in Financial Analysis

Cash represents the lifeblood of all business enterprises which is why it is important to analyze free cash flow which we define as operating cash flow minus capex, dividends, and stock buybacks. We illustrate DoorDash as an example of why cash flow analysis is so important. 

Lessons From Tucker Carlson

There are many theories about why Fox booted Tucker Carlson, but it may be a very simple reason which can instruct everyone involved in the consumer retail segment.

It is Imperative that Climate Change Regs Incorporate Economic Reality

This week we spotlight efforts by international agencies to lower the earth’s temperature by imposing onerous regulations on energy producers. We suggest it will be better to: begin a process of implementing continuous improvements designed to support both economic & climate progress; and use international organizations to share tech & best practices as opposed to providing them with regulatory powers best left to individual nation-states.   

Part 3 – It’s Nice for the US to Save the Climate, But What About the Rest of the World?

In our last 2 posts, we outlined the probability that the UN’s push to lower the world’s temperature by -2 degrees Celsius could drive significant U.S. energy price hikes & shortages. How is this going to help as Asia ramps up the use of coal? Can humans lower the earth’s temperature anyhow?

Part 2: Who is Left to Make Investments in Fossil Fuels & Clean Energy?

There is not a lot of incentive for profit-seeking companies to invest in demonized fossil fuels or in clean energy projects lacking ROI. This points to substantially higher energy prices and supply shortages that will have a profound economic impact.

Part 1: Ramping Energy Demand Clashes with UN’s Environmental Goals

From 2021 to 2050, ExxonMobil forecasts that 85% of the population growth will be driven by developing countries, which in turn, will drive a +15% increase in energy demand.

What if the Federal Government Was Turned into a 501c3 Non-Profit?

Given all the focus on the debt ceiling, we propose a thought experiment in which all 100 federal agencies must compete for charitable donations. If taxpayers get to choose for themselves what to fund, what might we learn? 

Like Sinatra Croons: “So you see it’s all up to you, you can be better than you are.”

The top-paid hourly workers are currently enjoying the fastest wage growth, indicative of the current challenge to recruit & retain a skilled labor force.

Digital Marketing Opportunities
Restaurant Research

A Restaurant Research LLC Company