“Affordable luxury” gives Starbucks record sales

People do not look to save on their cup of coffee, Starbucks concludes after another record quarter. The coffee chain remains confident for next year as well.

A little extra please

Sales climbed by 3 % to 8.41 billion dollars: the coffee chain mainly owed this record turnover to one week in September – the moment Starbucks introduced its famous autumn drinks with “pumpkin spice”. The week accounted for the best sales week ever.

Although prices rose some 6 % in the past year, consumers were not deterred. On the contrary: they opted even more for “extras”, such as whipped cream, flavoured syrup or an espresso shot to go with it. Today, 60 % of all drinks sold by the coffee chain are personalised in this way.

Interim CEO Howard Schultz sees Starbucks as “an affordable luxury” that customers continue to indulge in. On a like-for-like basis, global sales were up 7 % in the July-September period. Admittedly, the growth was mainly driven by North America, as coronavirus continued to plague China this summer.

Increasingly younger customers

However, net profit were halved to 878 million dollars, as the chain invested in new shops and employee wages. The company is battling a growing union movement, something that CEO Schultz has fiercely opposed for years. 249 of the 10,000 Starbucks shops in the US have now voted for a union. To halt this evolution, the chain has made beverage preparation easier with a new shop layout and has allocated 1.2 billion dollars to raise wages.

Next financial year (now starting), Starbucks expects global comparable sales to rise between 7 and 9 %, compared to 8 % in the financial year just ended. The coffee chain says it has very loyal customers, who are also increasingly younger. Today, more than half of its customers are either millennial or Gen Z.