Starbucks CFO 'encouraged' by over-delivery of expectations, consumer behavior shift
As inflation takes a toll on Americans' wallets, coffee lovers don't seem to be pulling back on their Venti iced cold brew with extra cold foam and two pumps of brown sugar syrup. It's quite the "opposite," according to Starbucks CFO Rachel Ruggeri.
"What we saw this quarter is the highest number of customer counts that we've ever seen, and the highest average weekly sales that we've ever seen," Ruggeri told Yahoo Finance Live.
Starbucks' fiscal third-quarter report surpassed expectations, with consolidated net revenues spiking 9% to a quarterly record of $8.2 billion.
"That means ... more customers are connecting with the brand and they're engaging greater when they come into our stores. We've seen a little bit of a shift in terms of the composition of our revenue since the pandemic and what we're seeing is higher tickets in a more modest transaction," Ruggeri said in regard to U.S. demand, where sales jumped by 9%, primarily driven by an 8% increase in average ticket size offset by a 3% decline in comparable transactions.
"We look at that as just a difference in how our customers are choosing to come to us ... it speaks to the demand that we're seeing, and we're incredibly encouraged by it," she emphasized.
With an eye on the next quarter, she said, "What we're very encouraged by is the fact that we were able to overdeliver on our expectations this quarter" with elevated growth from the first and second fiscal quarters.
Even with recession fears on the minds of both Wall Street and Main Street alike, cold beverages and premium offerings are being seen as a hot "opportunity."
"The opportunity around cold, and all our beverages frankly, is our ability to continue to create more premium offerings, with an opportunity to customize the ability to personalize drinks is what we think helps differentiate Starbucks. It gives customers a choice and allows them to express themselves through a drink that is suited for them."
Currently, 75% of beverage sales were cold, which is "typical" in the early summer months, up from 12% in the previous quarter.
On a call with analysts, Starbucks interim CEO Howard Schultz called cold beverages a "Gen Z product" for the brand, while customization options lend a "competitive advantage in our ability to customize almost any beverage that our customers want with speed."
Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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