Burger King Acquiring Canadian Coffee Chain Tim Hortons

August 28, 2014 by Leave a Comment

Burger King announces on Tuesday that they are acquiring the Canadian coffee and doughnut chain Tim Hortons in an $11 billion dollar deal. The aim is to convert Tim Hortons into a major player in the breakfast business in and outside of Canada. The new company will become one of the fastest growing fast food chains globally according to Burger King’s executive chairman, Alex Behring. Tim Horton’s could help Burger King become a part of the coffee and breakfast market within the USA which are currently controlled by Starbucks, Dunkin’ Donuts and McDonald’s. CEO of Tim Horton’s, Marc Caira, has mentioned the chain plans to re-design the stores to include couches and fireplaces as part of the efforts to be more noticeable in the U.S. Both parties will benefit from the deal, as Caira states that Tim Hortons will “win much quicker” within the U.S with Burger King’s help.

The lack of brand recognition will cause a struggle for Tim Horton’s to establish a clientele, especially while Starbucks is expanding its breakfast offerings and TacoBell are launching a national breakfast menu. McDonald’s also has plans to amp up the marketing for their breakfast business. Hopefully the newly partnered companies of Burger King and Tim Hortons will be able to successfully compete. The chains will continue to run independently in the sense that whoppers will not be on Tim Hortons menus, neither will doughnuts be offered at Burger King. CEO of Burger King Daniel Schawrtz states, “There’s no plans to mix the products or do co-branding.”

The new company will have roughly $23 billion in sales and over 18,000 locations after the deal is complete early next year. To read more about the acquisition and implications, click here

 

 

Filed Under: Global Market Buzz, Operations Tagged With: , ,

Starbucks’ Food Sales Increase Average Check

July 28, 2014 by Leave a Comment

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

 

 

Filed Under: Global Market Buzz, Local Market Buzz Tagged With: , ,

New Starbucks in Williamsburg

July 24, 2014 by 1 Comment

A new Starbucks coffee shop opened July 21st in Williamsburg next to the Lorimer/Metropolitan subway stop. The Williamsburg residents appear to be on the fence about the coffee shop’s new location. There is a strong concern that the Starbucks will hinder local coffee shops’ business. Although the opening was well advertised weeks in advance, few people chose to stop into Starbucks for their morning coffee or later for their afternoon frappucino. The adjacent deli, however, continued doing business as usual by serving the breakfast crowd their coffee.

It could be difficult to open a large coffee chain outpost in a neighborhood surrounded by independent roasters and where the vibrant coffee culture is already very established. The Starbucks staff seem confident that the residents will eventually warm up to the coffee shop as the location is very convenient; aside from being across from the Metropolitan Avenue subway, where the shop will serve many commuters on the L and G trains, it is also surrounded by building complexes and condos.

Residents may be concerned that the new Starbucks in Williamsburg is another reminder of the accelerated rate gentrification in the neighborhood, but Starbucks is determined to continue providing a good customer experience and attract a local stable clientele. To read more about the views surrounding the new Starbucks opening, click here

 

 

Filed Under: Local Market Buzz, Openings Tagged With: ,

Coffee Operators Driving Revenue Through Mobile Payments

July 16, 2014 by Leave a Comment

There is a definite compatibility between specialist coffee shops and mobile payments due to the fact that their primary product is purchased at such a high frequency. Consumers purchase coffee daily (often multiple repeat purchases per day) and would benefit from a streamlined payment method and loyalty programs such as can be offered by mobile payment solutions. The consumer demographic is also most likely to participate in the mobile payment methods as it consists mostly of young students interested in technology and consumers who have easy access to mobile technologies.

While Starbucks was the first to launch its well-known loyalty program and mobile payment app years ago, third-party mobile payment technologies are now cropping up targeting independent coffee shops to help them drive revenue and better compete with larger chains such as Starbucks. CUPS is one example of a third-party mobile payment apps designed to engage consumers by providing incentives through loyalty programs that offer discounts and special offers based on their purchase history. BeansUP is another recently launched innovative app that allows consumers to set coffee pick-up times; this will allow for an enhanced consumer experience as the product is prepaid and the guest can avoid peak hour lines and pick up their coffee directly at the counter.

The increased demand for efficient, streamlined transactions will only continue to grow and these mobile technologies definitely help meet this need. In order for consumers to adopt mobile payment methods they must first be intrigued by the incentives and sign up for a subscription to their preferred coffee shop’s mobile app. As consumer engagement increases so too will the use of mobile payments and therefore help to drive traffic and revenues.

To read more about these two new innovative mobile payment technologies, click here

 

Filed Under: Global Market Buzz, Local Market Buzz, Operations Tagged With: ,

New Starbucks Beverage Option

June 24, 2014 by Leave a Comment

Last year Starbucks tested Fizzio sodas in a few of their shops and are now expanding to the southern half of the U.S and Hawaii. By the end of this coming year Starbucks is hoping to have expanded the made-to-order sodas nationally. Starbucks has promoted the benefits of the Fizzio machine as it can add carbonation to already flavored drinks and not just water; the amount of fizz is also adjustable on the machine. During the rollout Starbucks will be charging fifty cents to add fizz to a beverage and will be implementing location-specific flavors.

Starbucks is aiming to attract more customers for lunch by adding the Fizzio machine to their shops. The chain is also introducing new Teavana iced teas and new sandwiches for the same purpose of driving more lunch time traffic into their shops. For the moment Starbucks is not working on creating their own branded soda machine, however some well-known companies such as Keurig Green Mountain and Bevyz are partnering with Pepsi and Coca-Cola to design their own at-home soda streams. It probably won’t be long until the chain also has a go at it.

To read more about Starbucks’ new beverage option click here

Filed Under: Global Market Buzz, Local Market Buzz Tagged With:

Starbucks Benefits From Transfer of Store Sales to Online Sales

January 29, 2014 by Leave a Comment

For the first time online traffic has surpassed foot traffic this past holiday season, according to Starbucks CEO/president and chairman Howard Schultz. A large majority of consumers also opted to purchase gift cards as opposed to gifting specific products.

Fast Casual reports that Starbucks processed more than 40 million new card activations valued at more than $610 million in the U.S. and Canada during Q1. This included 2-plus million new activations per day in the period immediately leading up to Christmas, and $1.4 billion of card loads globally, Schultz said.

Starbucks is not only benefitting from the transfer of store sales to online sales, but also the gain of new customers who purchased gift cards. Most of of the gift card recipients were first-time Starbucks purchasers, thereby strengthening opportunities for brand loyalty.

Filed Under: Uncategorized Tagged With: ,

Coffee Bartering at Tonx: Starbucks Card for “Higher Quality” Coffee Beans

January 10, 2014 by Leave a Comment

Coffee subscription company Tonx is offering dollar-for-dollar credit towards “better quality” coffee beans in exchange for your Starbucks gift card balance. Their philosophy: “We Source. We Roast. We Ship. You Brew.” The Tonx team comprises coffee mavens whose resumes boast high-end roasters Ritual, Intelligentsia and Stumptown.

Tonx’s homepage forces prospective subscribers question the value of a dollar through a compelling visual:

$38 at Starbucks = 8 frappucinos

or, 11 cappucinos

or, 17 drip coffees

or, 48 cups of “carefully sourced, expertly roasted, super fresh coffee.”

The website proceeds to highlight the company’s differentiation points— “highest quality beans, brew guides, affordable tools, one-on-one brew help, coffee ratings, weekly publications,” and most importantly, “happiness.”

Filed Under: Global Market Buzz, Trending Now Tagged With: ,

Starbucks Pays it Forward X 870

December 30, 2013 by Leave a Comment

In light of the holiday spirit, a Starbucks drive-thru in Newington, Connecticut has just broken the “pay-it-forward” record. Yesterday, at least 870 customers paid for the order of the person behind them. In turn, this Starbucks location received the gift of giving too, as the higher than usual traffic led to a spike in sales. Good Morning America covered the random acts of kindness.

Filed Under: Global Market Buzz, Operations Tagged With: ,

“Secret” Menus, or Not-So-Secret Menus…

December 26, 2013 by Leave a Comment

Mark Wilson, contributing writer at Fast Co. Design, detailed the ins and outs of “secret” menus at restaurants including Chipotle, Starbucks and In-N-Out Burger. Chipotle’s “Quesarito,” Starbucks’ 170,000 customizable beverage permutations and In-N-Out’s “animal-style” fries are a few of the secret (or not-so-secret) menu options that add to these restaurants’ mystique and allure.

“I think of it as the customer’s the brand manager,” Chris Arnold, Chipotle’s Communication Director says. “The experience of the public is something different for everyone, like an iPod in a way. How many billions and billions of iPods are in circulation, and yet no two [playlists] are alike. You buy a burrito, I buy a burrito. We pay the same thing for it, and they’re two very different things.”

Read about Wilson’s comically relentless quest to order the arcane “Quesarito” at Chipotle, amongst his other classified culinary discoveries.

Filed Under: Heard on The Street, Operations, Trending Now Tagged With: , , , , ,

Starbucks’ Productivity Increases by 46%

November 25, 2013 by Leave a Comment

Starbucks’ productivity, loosely defined as its “transactions per labor hour,” has increased almost 50% since 2008. One reason for the surge in efficiency is the improved speed and aptitude of the baristas. Another key player is Starbucks’ recent $100 million acquisition of the San Francisco bakery La Boulange, which in turn lures customers at all times of the day, not just breakfast.

Filed Under: Global Market Buzz, Operations Tagged With:
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