Corporate Profiles - 2023 - 104

COMPANY overview
Starbucks Corp.
C
old coffee and customization are central to
Starbucks Corp.'s plans for future growth. The
company's North American business generated
record revenue in the third quarter of fiscal 2023,
growing 11% from the same period last year, with cold
beverages accounting for 75% of the quarter's sales.
Especially popular with younger consumers,
the cold drinks also create solid opportunities for
high-margin customizations like flavor modifiers
and cold foam, Starbucks' fastest-growing customization
option. The modifications now produce
a combined total of more than $1 billion in annual
Chain's revenue increases behind cold coffee,
customization, food attachment
all-time-high breakfast sandwich sales and food attachment
rates in the third quarter. The food segment's
performance was partially responsible for Starbucks'
strong unit volume levels, which outpaced pre-pandemic
numbers across all dayparts.
" As an attach business, food drove a higher
Chief executive officer -
Laxman Narasimhan
revenue. Overall consumer demand for personalized
Starbucks beverages has more than doubled
since 2019, and over 60% of beverage orders in
US stores were customized in the third quarter.
" Our growing tech-enabled convenience capabilities
are driving our customers to engage
more deeply with Starbucks, as evidenced by the
growth in customization, " Rachel Ruggeri, chief
financial officer, said in an Aug. 1 earnings call.
" Our customers have readily adopted the practice
of customizing their beverages allowing for a more
personalized and differentiated experience, while
contributing to a growing, higher-margin ticket
with abundant opportunity ahead. "
Food sales remain a principal driver of long-term
growth for Starbucks. The company first identified
food as a " golden opportunity " in 2021 and has continued
to seize on the category's potential, registering
104 \ October 2023
ticket in the quarter, improving volume growth and
contributing to the record average weekly sales, "
Laxman Narasimhan, chief executive officer, said
in the Aug. 1 call. " We are excited about the significant
opportunity in food as we explore new, elevated
and convenient food offerings. "
After one year of implementation, the company's
$1 billion reinvention plan is delivering positive outcomes.
Ms. Ruggeri said the strategy's investments
into store equipment upgrades, such as new warming
ovens and beverage machines, and improvements
in employee training and pay have resulted
in enhanced labor productivity and sales leverage.
" Our foundational reinvention plan that we announced
last year is essential to the improvements
that we're seeing now, " Mr. Narasimhan said. " There
are meaningful improvements to the store environment
as well as the productivity gains that we're
making, our equipment rollout is on track, our peaks
are growing faster than the rest of the dayparts. "
The program's success has led the company to
expand its efforts to maximize productivity beyond
the original reinvention plan and begin to reexamine
inefficiencies in its end-to-end supply chain process,
store design and technological capabilities. Starbucks
also hired Arthur Valdez Jr. as its new chief
supply chain officer to support its expanded goals.
Following its announcement to include drivethru
ordering in 90% of new stores, the company is
further developing its focus on convenience. For instance,
Starbucks Cafes in more than 1,700 Target
Corp. stores are set to offer drive-up service, where
consumers will be able order their coffee online and
have it brought directly to their car, starting in October.
The company also partnered with DoorDash,
Inc. in January to bring 95% of its core menu items
to the delivery platform in all 50 states.
" We are close to creating a $1 billion incremental
leg in our delivery business from minimal presence a
few years ago, " Mr. Narasimhan said. CP
Starbucks Corp. net earnings
(fiscal years ended in September)
in millions
2022
$3,282
2021
$4,199
2020
$928
Source: Starbucks Corp.
Starbucks Corp. net revenue
(fiscal years ended in September)
in millions
2022
$32,250
2021
$29,061
2020
$23,518
Source: Starbucks Corp.
Starbucks Corp. share price
Sept. 15, 2023 = $96.23
$80
$90
$100
$110
$120
Sept. Nov.
2022
HIGH =
May 1, 2023 = $113.39
LOW =
Oct. 24, 2022 = $82.02
Jan.
2023
March M Julyay
Source: New York Stock Exchange
STARBUCKS CORP.
Sept.
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Corporate Profiles - 2023

Table of Contents for the Digital Edition of Corporate Profiles - 2023