Starbucks Looks Like Its Old Self Again as Brisk Growth Returns
Comment of the Day

July 26 2019

Commentary by Eoin Treacy

Starbucks Looks Like Its Old Self Again as Brisk Growth Returns

This article by Leslie Patton and Anne Riley Moffat for Bloomberg may be of interest to subscribers. Here is a section:

The strong report comes one year after longtime leader Howard Schultz retired from the chairman’s job and left the company, putting decision-making squarely in the hands of Chief Executive Officer Kevin Johnson, who’d been in the post for about a year at that point. Johnson got right to work, bringing life back to an aging brand that had started to lose its cachet among the hipper, smaller chains sprouting up in its shadow.

His playbook included closing underperforming locations in densely penetrated U.S. markets, turning over some foreign regions to licensees and revamping the chain’s loyalty program. He has also expanded food offerings to compete with trendy salad shops and found ways to launch the new drinks that Gen Z and millennial customers want, like Nitro cold brew and high-protein offerings, in as little as 100 days. In the past that may have taken up to 18 months.

Eoin Treacy's view

The strong performance of Starbucks, McDonalds and Beyond Meat highlight the fact that small changes to menus which gel with consumer demand can have an outsized impact on results as customers re-engage with the brand. Whether that is protein-infuse drinks at Starbucks, better breakfasts at McDonalds or vegetarian offerings at fast food restaurants, these new product offerings have revitalised interest and highlight the strong cashflows of consumer- oriented companies.

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