Despite financial coaches telling consumers to skip their morning coffee runs to save a couple bucks, the demand for drive-thru java continues to rise. (It helps when you’re selling a product with addictive properties like caffeine).
Starbucks, the largest coffee chain in the world with nearly 36,000 stores, reached a historic high of $8.4 billion consolidated revenue in the fourth quarter, up 11 percent from last year. The company also experienced more foot traffic than the wider coffee segment this year.
With 15,878 stores in the U.S, Starbucks grew its unique customer base 9 percent year-over-year and increased Starbucks Rewards membership 16 percent to 28.7 million members. Starbucks can thank Gen Z for a large portion of that boost, who have “significantly more discretionary money” and “predictable” loyalty to the Seattle-based coffee brand, Starbucks Interim-CEO Howard Schultz said.
In Q4, which ended October 2 for Starbucks, same-store sales rose by 7 percent globally and 11 percent in the U.S., driven primarily by an 8 percent increase in average ticket sales, including an 18 percent increase in food sales in North America.
Meanwhile, international comps dropped 5 percent, driven by the same percentage decline in comp transactions and a 1 percent decline in average ticket sales.
Despite increasing prices nearly 6 percent over the last year, consumers aren’t recoiling.
“We haven't seen the loyalty and the transactions abate,” Schultz told investors.
He noted customisation options help to drive ticket sales up.
“And the ticket is becoming more accretive as a result of the modifiers, and those modifiers seem to be more consistent and greater with cold beverages, which is now over 75 percent of the U.S. business.”
Starbucks opened 763 new stores in Q4, ending the year with 35,711 stores in 83 countries—comprising 51 percent company-owned units and 49 percent licensed units. China surpassed 6,000 stores.
In 2022 overall, Starbucks grew global revenues to a record $32.3 billion, a 13 percent gain over last year. U.S. net revenues were up 15 percent year-over-year to $6.1 billion.
“Our strong performance in the quarter and year is particularly gratifying, in that it underscores the relevance of the Starbucks brand and the strength of our relationships with our customers around the world in the face of these unprecedented challenges.”