Starbucks posts massive sales even as U.S. inflation soars
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Starbucks posts massive sales even as U.S. inflation soars
The Starbucks logo is seen on a storefront in Boston on Oct. 14, 2022. Michael Dwyer/AP
Starbucks drinks are the most expensive they've ever been , but customers keep coming back.
As stores nationwide hiked prices due to inflation, sales continued to climb, the company said in its earnings report released on Thursday.
The global coffee chain reported record-breaking sales over the last fiscal quarter that ended in October. In North America, sales were up 11% compared to the same period last year.
Starbucks saw a 10% increase in the average ticket, meaning customers spent 10% more on each purchase this year than they did during the same period last year, on average, according to the report.
In North America, Starbucks generated $6.1 billion in revenue last quarter, up 15% from the prior year — another all-time record, said Rachel Ruggeri, Executive Vice President and CFO, on a conference call with investors.
But profits were down, at $1.1 billion last quarter compared to $1.3 billion the prior year.
As its competitors also feel the heat of inflation, Starbucks has more room to hike up its own prices, said David Reibstein, a marketing consultant and professor at the University of Pennsylvania's Wharton Business School.
"As they raise the price, they've got so much customer loyalty that they're still able to keep those particular customers," he said.
Still, the company faces challenges elsewhere as it continues to push back against national unionization.
Earlier this week, federal labor officials ordered Starbucks to re-open a popular location in Ithaca, New York, that the company shut down earlier this year. Workers at the Ithaca location near Cornell University, who voted 19-1 to unionize, allege that Starbucks closed the location due to union activity.
Workers United, affiliated with the massive Service Employees International Union, filed a complaint with the National Labor Relations Board on Tuesday.
As NPR previously reported , more than 300 stores have had union elections and about 250 Starbucks stores have successfully unionized over the past year. A store in Buffalo, New York was the first to form a union last December.
But unionized stores in the United States make up about 3% of about 9,000 company-owned locations across the country.
Plus, any negative PR from the unionization activity doesn't seem to have a huge impact on sales, according to Reibstein.
"The unionization is almost a separate issue," he said, explaining that not very many customers are concerned about the labor and union issues.
Starbucks founder and interim CEO Howard Schultz said the company plans to add eight new stores per day to reach a goal of 45,000 locations globally in 2025.
"We continue to manage the business through today's challenging operating environment," Schultz told investors on the conference call.
And don't expect prices to come down anytime soon.
"Right now, we're at a stage where everybody is expecting inflation and not overly put out by the fact that Starbucks is doing it," said Reibstein.
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Here's one reason there's inflation - people stupid enough to pay $5 for a cup of coffee. There is a Starbucks a two minute walk from the front door of the building I live in and I really wonder as I walk by it why people are so willing to throw money away. I go back to the time when a cup of coffee cost a dime at a diner or Woolworths. I brew my own from canned ground coffee in my coffeemaker for one mug every morning and that's good enough for me.
You think that people are being stupid for paying $5 for a cup of coffee? Starbucks Coffee isn't even that good.
Have we ever analyzed who drinks there and why?
Do you remember the Wine company that increased sales by raising prices? They made their product into a status symbol and IMO that is just what Starbucks has done.
Yes
I don't know
no
I apologize for taking up so much valuable space on the NT Front (Home) Page at such a critical time for the members to post their articles/seeds attacking each other over the midterms.
Starbucks sources their beans from irresponsible commercial coffee growers. If you like coffee with pesticides, enjoy your cancer.
Au contraire, Voltaire, my coffee is better than theirs.
Starbucks has always been a prime example of style over substance. A lot of people think it is a status symbol to be seen with the Starbucks logo on their paper coffee cup as they walk down the street or are in the office.
It's decent coffee, but nothing at all on the level of the reverence some hold for it.
Starbucks lost 10s of millions here... people don't like it and we have our own coffee culture...most Starbucks shut down here.
$5 is the norm here for a capucinno, $5 in China sounds rather expensive seeing it is meant to be cheap living over there?
This was from a 9 year old article - it was around US$4 then for a "grande" latte.
Hmm ripped off big time..
Exactly, but I think John has indicated the reason they're still in business here - a show of success and wealth is not beyond Chinese people.
I'll stick with X Large refill for $1 if I bring my cup at Sheetz, and I get some free ones, They opened a Starbucks in my town but I have not been there but it seems busy. It is in same building as ABC store and Jersry Mikes subs that I do visit.
I think Sheetz has better coffee, anyway. Starbucks tastes burnt to me.
The only thing I buy anything from Starbucks is their Dark Roasted Sumatra whole beans. I buy the whole beans and grind only enough for 3 cups of coffee at a time in my personal grinder, then brew the coffee in my French Press Bodum.
The reason I buy the whole beans and only grind enough for 3 cups of coffee each time, is that the whole beans will stay fresh longer than the ready ground coffee.
I have never heard of Sheetz, nor know of one anywhere around here in Calif. I don't like sweet coffee or tea, nor the flavored drinks.
Sheetz is a gas station/convenience store chain. They do made-to-order food and drinks, including coffee and coffee-house style drinks.
I generally drink my coffee black, no sugar, but I'll admit to an occasional latte or frappe. Not often, though. They're sugar bombs. I make sweetened iced coffee at home sometimes, but don't use nearly as much sugar as Starbucks or Sheetz.
I agree, sandy Starbucks coffee is bitter and has a burnt taste to me. I love my coffee and am lucky enough that I have a friend that is a Kona coffee grower on the big island and he sends me packages of his coffee. There is nothing in the world like 100% Kona coffee, expensive as hell but heaven to drink.
I regret that when I was on the big island, I didn't know anything about Kona coffee. It would have been a lot better for me to have brought home a case of it, instead of bringing home a piece of lava rock.
Did you know that in Ojibwe, Sheetz would be spelled, Shiitz?
No forked tongue here.
Well, I have heard complaints about the effects of the food
Never experienced them myself, though.
We are getting a Buc-ee's here. It is not known for coffee though. Just a huge store.
Thank you for the information on what Sheetz is. I drink my coffee and tea without sugar, hot or cold. I'm not much on sweets of any kind, but, I like a vanilla ice cream sandwich now and then. I bought a Latte once and took a sip of it, then handed the rest to my Granddaughter. Much too sweet for me.
In China, coffee is growing in popularity and a lot of privately owned coffee houses are starting to spring up in major cities. A while ago I posted an article about one such establishment that opened here in Chongqing. Here is a link to it ->
setting here enjoying the morning and Sheetz coffee now
For that little caffeine kick in the morning I switched to Mountain Dew (generic).
I have never liked Starbuck's coffee. Way too expensive. We had a Starbucks kiosk inside the local Safeway store here in my hometown on the border and it lasted about two years because of a lack of customers. In addition, I started boycotting Starbucks after their BS shenanigans by not allowing people legally allowed to carry open or concealed firearms into their locations.
Coffee is a cup of hope in a world full of chaos and Mondays.
I like that. Would you mind if I borrowed it and had it printed on some mugs?
There's always the original blend
I like that as well, kinda goes with the Monday thing. Been looking to get a new set to replace my University of Northern Texas mugs...
I'll take a cup of two of that!
I can't open your image. Please explain what it is.
That should help us build an NT membership of good new people. s/
Switch to Lavazza and say goodbye to Monday ... every day becomes Tuesday.
Ah yes, I would like a Grande iced caramel macchiato.