Starbucks’ Numbers Indicative of American’s Need for Coffee

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While the economy is still a concern for most Americans, spending on daily coffee is not. Starbucks recently reported that its profit rose in the second fiscal quarter in the US, it’s largest market. Sandwiches and pre-packaged lunch boxes helped to boost profits.

During a time where most fast food companies are reporting trouble due to American’s recent attempts at saving money, Starbucks experienced a 7% sales increase from cafes that were open at least 13 months. This is while fast food joints, such as McDonald’s and Burger King saw a decline in sales. Starbucks increase in profit is remarkable, as a recent poll showed that only 1 in 4 Americans expected their financial situation to improve over the next year.

The coffee giant has been working hard, and rolling out new products left and right recently. This is including a new line of Evolution bottled juices available in their cafes, and a new line of baked goods from a bakery in San Francisco. Troy Alstead, CFO of Starbucks, has noted that they company hopes to become more of a lunch destination. Alstead also pointed out that traffic was beginning to grow during the afternoon hours.

The loyalty program has also been a main focus for the company. A boost in the loyalty program is expected to increase the customer return rate.

Starbucks has 18,000 locations worldwide. At established cafes, sales have risen 6%, including an 8% increase in Asia. However, Europe is still struggling – the sales figure for the chain fell 2% due to competing coffee shops. Alstead says of the decrease¬†“It just continues to be a tough environment for us — and for everyone.” To combat the issues of growth in ¬†Europe, Starbucks is pushing the licensing model more in hopes that this will lower overhead costs and give more control to it’s local partners who are going to be better at catering to local tastes.

Starbucks earned $390.4 million this quarter, which is up from last years $309.9 million.