SEATTLE – Starbucks Corp.’s Americas business unit continues to focus on improving the company’s performance during the afternoon daypart. Future investments will revolve around its cold beverage offerings and continuing to expand its lunch menu.
“…I’ve been talking a lot to customers,” said Rosalind Gates Brewer, chief operating officer and group president of Americas, for the company during its annual shareholders meeting that was held on March 21. “In these past few months, they’ve told us exactly what they want from us, and we’re learning about the afternoon, and these learnings are fueling the innovation in cold brew and beyond.”
Ms. Brewer emphasized consumers view afternoons as not just about taking a break, but also making a transition.
“They’re about consumers taking me-time,” she said.
To capitalize on Ms. Brewer’s learnings, Starbucks plans to continue investing in cold beverage innovation and expanding its afternoon menu offerings.
“… Cold isn’t just for summertime anymore,” she said. “Five years ago, cold was about 37% of our beverage mix, and now it’s over 50%. With 2017, total cold beverage sales in the U.S. company and operated stores reaching nearly $5 billion. So, we’re building multibillion-dollar platforms within cold, including cold coffee and Teavana, with the introduction of Teavana Infusions last summer. And this summer, we’ll expand Starbucks Refreshers, a platform that has seen 40% growth year-over-year with new unique flavors and colors to reach even more customers and provide better lunch-attach opportunities.”
Ms. Brewer called Starbucks the “market leader” in the cold brew coffee category and announced the company will expand the availability of its Nitro Cold Brew platform from 2,300 stores around the world to 4,000 by the end of the year.
“It’s exciting stuff,” she said. “We aren’t just rolling out more stores, but we have the next generation of Nitro, and that will deliver breakthrough innovation for us, including multiple tabs for Nitro coffee, tea and milk. And many of these platforms include cold brew, Nitro, Teavana.”
Starbucks management has established a goal of doubling its food business by 2021. Ms. Brewer said the company has answered the morning coffee customer’s need for convenient, hearty menu items and they continue to focus on creating the same level of customer engagement in the afternoon.
“…the biggest opportunity for food innovation is for lunch,” she said. “…we will offer customers more of what they are expecting and elevating our current Bistro Box line, which has grown at a rate of 20% in each of the past two years. We will also continue to roll out Mercato regionally, with more than 1,000 stores by the end of the year.”
Efforts to grow its afternoon business will coalesce around Starbucks’ mobile order and pay (MOP) program. The company currently has 15 million active Starbucks Rewards members and management expects to see double-digit growth in Rewards members each year. But an additional opportunity for the company is the 75 million unique customers who visit Starbucks each year but are not a part of its Rewards program.
“We have plenty of opportunity to form active relationships with millions of more customers by providing access to MOP for all customers, improve marketing to millions of lapsed Starbucks Rewards customers and WiFi e-mail sign-up,” Ms. Brewer said. “All of this work is underway. Then once we have these, we turn on digital marketing and one-on-one personalization, and that’s been really successful in our Starbucks Rewards through a very large group, and that extension is important to us.“This allows us to bring product innovation across coffee, refreshment and food to customers with focused marketing and all of the work that we need to do to stay ever-present in front of our customers. We take true pride in continuing to drive innovation across the company as a whole.”