Starbucks' second-quarter profits up 18%; same-store-sales growth slows

Revenue for the latest quarter rose 20% to $2.26 billion, compared to $1.89 billion last year. (Analysts had hoped for revenue of $2.3 billion.) Starbucks says sales at stores open at least 13 months rose 4% over the same quarter last year. That's toward the low end of its forecast, but president Jim Donald says that's not a concern. "We're extremely pleased," he says. Prediction: There will be more pressure to upsell in an attempt to goose the same-store figures. (Associated Press)
> From Marketwatch.com: "Same-store-sales growth at Starbucks has slowed recently. The company has been adding food options, including warm food at some locations; entertainment; and drive-through windows. It also has invested in equipment and labor-saving devices to relieve store congestion."

Comments

[sbuxnewbie]

Yes, same store sales has slowed. That's the effect of opening new stores within a mile of existing stores; you siphon off customers, even as you work to attract new.

Our district recently split into 2 districts. One of the bigger stores in the other, bigger district is in a strip mall, and was doing phenomenal business. Then, two stores opened nearby - one in an enclosed, traditional mall, and one one the same street as the strip mall, but two blocks away - and this one has a drive through.

The mall store didn't hurt too much, but the daily business loss at the older store is almost equal to the daily gross at the new drive through store.

But the DM blames the manager of the older store for the loss of business.

Sometimes, I wonder at the logic of the bosses.

My DM, on the other hand, is looking at our slow, steady growth, the 4 star 100% on every snapshot, and less partner turnover than many of the new stores. He isn't jumping for joy, but he isn't screaming at us either.

[Core values or Profits?]

Spot on Jim. Would you like fries with that?

[justabarista]

Actually, the message I got from the summer video was to only try to upsell if you are meeting a need that's been presented to you. The case in the video was a lady going on a long drive and the barista suggesting a bottle of water. They also did a scenario where he just suggested cookies out of nowhere. The whole cookie situation seemed frowned upon.

[atownsbuxrules]

...Is there really more to upsell? In drive-through I upsell breakfast sandwiches, then when denied, I offer a pastry or banana or bottle of water. That's all done over the speaker. Then when they pull up I have stuffed animals in the window (the monkey and frog currently) and if there's a kid in the car I'll mention that we have sugar cookies...
I feel like satan somedays, but there's so much pressure to sell sell sellllllll! :(

[SBUX Champion]

Sell, sell, sell. Thats sort of a bad thing for a business like Starbucks huh? Come on people helllllooooo The more money we pull in the better.

18% up? I love it, love it, love it, love it!

How about a venti? Of course you will!

[Core values or Profits?]

Sbux Champion -

I'm a shareholder so I want the company to grow. However, I see too may similarities to mistakes McDonald's made a few years ago. They focused their growth on more and more stores and that masked the problems they had at their existing stores. It wasn't until recently, when McDonald's refocused on the basics (core product innovation, etc.) that they've been able to return to the growth we investors expect.

Starbucks is heading down the same path. Schultz is right - SBUX has lost focus on its core.

I hope they get it back, or else, John Moore will be asking "Would you miss Starbucks" in his Would you Care series.

[redcup]

oh, you gotta love the summer success video. even though those are actual baristas at an actual sbux, is anybody really working together like that?

[French fry]

Hello,
I am a French journalist working on story about Starbucks and how it can be seen as "mcdonaldising" itself. Does anyone have comments on that issue ?
In particular, in France for instance, like in a few other countries, we see McDonald's coming up with this new concept instore : McCafé, which kind of looks like a Starbucks inside a McDonald's store. How defensive is that ?

[20secondshotguy]

"is anybody really working together like that?" - Redcup

Yes.

When we train folks right and everyone knows deployment, amazing things happen.

One of my favorite Starbucks moments:
Three registers open, lines ten people deep at each one. Double barring at CBS AND the bar. Two hours in to what will be a steady push through five hours of volume, one partner turns to another and says "it's not that busy today." The other replies, "yeah, you're right."

I was shocked when I heard them say that.

Later I realized we had the right people on and they knew what they were doing. I thought my manager was training happy, but it paid off.

And the shift needs to be totally on top of their game as a floater (Travis wasn't coasting).

That same store was hell when the floater got locked on the bar or at one of the main two registers.

[Jeff]

I don't around to other stores very much, but I had to pick up some cambros for a charity event. Went to 3 new stores. They were all identical - with PLASTIC furniture! It really felt like Mickey D's.

As a shareholder you just gotta love it when the headlines show profits up 18%, while the same day the stock drops almost 3%. Since December this stock has given me such a warm fuzzy feeling inside...not.

[AZSBUX]

From the counter of the SBUX that I frequent, the "back room" white board can be seen. Yesterday, I read a statement on that board, directed to employees, that each partner MUST offer pastry to every customer who orders a drink only.

I was mildly offended by that statement. If I want a pastry, I'll ask for one, thank you very much. It's like Safeway, you can't clear the checkout now without answering 3 questions about finding everything you were looking for, would you like to buy ice, would you like to buy stamps, have you heard about our new gas discount program, etc, etc.

Retail managers/Marketing folks don't realize that many/most people feel that the retail management is crossing a boundary, implying that the customer doesn't know what it wants.

I know what I want and have no problem asking for it. When I want more, I'll ask.

[barista]

Honestly, every one just needs to give Starbucks a break you are all so anal about what they do and how up selling is such a horrible thing. But Starbucks is a great company and it's a great company for a reason. I truly think that every one is just upset or jealous that they just can't make their business as good as Starbucks.

[eBridge advertising]

McCafé, which kind of looks like a Starbucks inside a McDonald's store. How defensive is that ?