At the end of Q2, Java Juggernaut, Starbucks, reported it had seen its earnings and traffic crash. Not only that, but the coffee chain is underperforming in its two strongest markets.
Between inflation and controversy, this is not as shocking as it might have been in the past. Nonetheless, Starbucks has a plan to return to its former glory…
But is it too little, too late?
Starbucks Earnings Suffer for Two Fiscal Quarters Straight…
Rewind to November of 2023 and Starbucks was riding on a high of stellar earnings and plans of expansion…
And, they planned to continue this while cutting costs.
However, 2024 has not been kind to the brand with revenue dropping for the second time within the year…
Further, Starbucks’ Q2 earnings report showed that same-store sales and traffic fell in the U.S. and China.
Specifically in its home market of the United States, it dropped 4% in sales and 7% in traffic per cafe.
Then, Starbucks China — where they formerly were the number one coffee brand — lost 11% of revenue and 8% of traffic per location.
The company’s current CEO, Laxman Narasimhan, said this about its underwhelming quarter…
“IN A HIGHLY CHALLENGED ENVIRONMENT, THIS QUARTER’S RESULTS DO NOT REFLECT THE POWER OF OUR BRAND, OUR CAPABILITIES OR THE OPPORTUNITIES AHEAD.”
via CNBC
Still, shareholders want improvement, not excuses. To that end, what is Starbucks going to do about it?
Starbucks’ Plan to Reverse Downward Trend
Starbucks does not plan to sit idly by as its earnings struggle. The brand has a strategy. This battle plan consists of targeting occasional customers and meeting their demands.
Their method of accomplishing this has two pieces.
- By allowing customers to use their “order ahead” app without signing up for its loyalty program.
- Testing running certain locations overnight to accommodate late-night caffeine lovers.
Narasimhan told CNBC early trials of extended hours have already proved successful. We will have to wait until the end of Q3 to know for certain the results of these steps…
Until then, be great.
— GCTV Staff
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