Starbucks’ Food Sales Increase Average Check

Starbucks completed a very successful third quarter with a $513 million net income  (23% gain compared to the year prior), and a 6% growth in global same-store sales. The coffee shop credits its non-beverage sales for the increase in traffic and average check. The sales of the new breakfast sandwiches that were launched in March increased by 40% during the quarter. Same-store sales increased 7% during the quarter with the new food items being responsible for 2% of that growth. The new hand-crafted Fizzio sodas and Teavana Oprah Chai and shaken iced-teas were also big contributors to the sales increase in the quarter.

This news came in sharp contrast to its competitor, Dunkin Donuts, who released a more disappointing quarterly report. Dunkin’ Brands adjusted their expectation of a 3-4% increase in same-store sales to being in between 2-3%. Nigel Travis, Dunkin’ Brands’ chief executive and chairman stated, “Our performance in the second quarter was disappointing, both domestically and internationally.” Dunkin’ Brands mentioned that the increased competition during the breakfast daypart (TacoBell now increasing breakfast offerings) combined with challenging macroeconomic factors (including a harsh Spring climate) all contributed to the disappointing 2Q. The brand now expects a revenue growth between 5-7% compared to the 6-8% projection set earlier in the year.

Food sales at Starbucks are allowing the chain to increase traffic during what would usually be considered the slower day parts for coffee establishments such as evenings and afternoons. Howard Schultz, Starbucks Chief Executive Officer and chair, has hinted that the company is working on making the lunch hour at Starbucks look different soon. Starbucks is also hinting at solutions for paying in advance and picking up using new mobile technologies. Schultz states, ” It’s clear to us in our research that express order and pay is a big, big idea.”

Overall Starbucks has plans for down the pipeline that include more food offerings and new mobile payment technologies which have already proven to increase average check and traffic. To read more about Starbucks’ success with improved food offerings, click here