Loyalty Program Pays Off for Starbucks
Kevin Johnson, president and CEO summed up Q2 ’21 in one sentence: “Anyway you look at it, our second quarter results were phenomenal in the U.S. and exceeded our expectations.”
U.S. Sales: Fully Recovered
“Many of us have lived this past year feeling isolated, protecting ourselves and our families from COVID-19. We now share a powerful craving for human connection, a desire to socialize and feel part of a community and the need to be with others and heal. And with vaccination programs under way and in turn consumer mobility, we have begun to see what we describe as the great human reconnection,” said Johnson in an earnings call with analysts. “This is evidenced by our Q2 sales in the U.S. which fully recovered in the quarter.” On April 27 Starbucks Corp. reported financial results for its 13-week fiscal Q2 ended March 28.
Q2’ 21 highlights include:
- In the U.S., Starbucks Rewards 90-day active members increased to 22.9 million, up 18% year-over-year. Those loyal shoppers are spending more per transaction: same-store sales grew 9%, with average tickets increasing 21%, while comparable transactions fell 10%.
- In China, it’s No. 2 market, comp-store sales grew 91%, with a 93% increase in transactions, and a 1% decline in average ticket size. In China, Starbucks expanded the Starbucks Now mobile order and pay service to WeChat, making mobile ordering available to customers on Alibaba and WeChat ecosystems and the Starbucks app.
- China’s store count topped 4,900 with the opening of 110 net new stores in Q2. Globally Starbucks has nearly 33,000 locations.
“…Sales in our two lead growth markets have returned to roughly pre-pandemic levels, albeit with different customer patterns than before the pandemic,” said CFO Rachel Ruggeri.
In the U.S., the coffee retailer is starting to see a return to the early morning rush as lockdowns wane, vaccination rates rise and lifestyles return. “In terms of dayparts, we saw our two-year comp growth in all dayparts. So we've seen that morning -- that morning ritual return, and we've seen positive two-year comps across those dayparts, which is a very, very positive sign," said Johnson.
Game Plan for Loyalty
Starbucks Rewards is 22.9 million active members strong and accounted for 52% of total U.S. sales in Q2. During the earnings call with analysts, Brady Brewer, Executive Vice President and Chief Marketing Officer, shared the game plan to take the loyalty program new heights.
“…There are few things that we're doing,” Brewer explained. “One is we want to know as many customers as we possibly can. We want to personalize their experience, and we want to make the experience effortless. And so effortless means things like mobile order, curbside, delivery.”
Brewer also pointed to the Stars for Everyone initiative, a program that launched to make it easier to join and to make purchases with the pay-as-you-go option “so that customers can get the benefits of the program and experience the incentives and the personalized experience they get through the program. And it's through those efforts that we are attracting more customers into the program.”
“Our 90-day active SR member base has expanded by 19%, a clear testament that the program is attracting customers as we had intended,” added Johnson.
PART 2: How Starbucks is Using AI and Predictive Analytics
Starbucks execs explain how the coffee retailer is using AI and predictive analytics.
A full earnings release is available here.
