Starbucks Still Brewing Growth

Customers are going to Starbucks (NASDAQ: SBUX) 28% more than they were a year ago. The average customer visited Starbucks 3.7 times a month in November compared to 2.9 times a month last November. Comparably, that is 20% more than the 3.1 visits per month for Dunkin Donuts customers. Dunkin Donuts led the visits per month war last November with 3.1 monthly visits compared to 2.9 visits for Starbucks customers.

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In addition to visiting more, Starbucks customers spend more per visit. Starbucks customers spent $6.36 per visit compared to $5.92 per visit at Dunkin Donuts. Both coffee shops have seen increases in the average spend per visit in the last year. In November 2007, Starbucks customers spent $5.97 a month, while Dunkin Donuts customers spent 5.00.

This leads to an average monthly spend of $23.37 for Starbucks customers, a 29% increase over the $18.09 Dunkin Donuts customers are spending per month.

Individually, both companies have seen impressive year over year growth. Starbucks customers are spending 36% more from a year ago. The huge spike is a result of increasing both the number of times their customers shop at Starbucks and the amount they spend at each visit. Dunkin Donuts customers are spending 17% more a month compared to a year ago, entirely due to customers spending more per visit.

So far, the economic woes haven’t slowed down people’s thirst for coffee. Expect Starbucks to show continued growth as people treat themselves to smaller items like fresh brewed coffee, and cut back on larger ticket items like dining out.

Disclosure: no positions

Comments

[Shawn Ward:]

Data is compiled from Geezeo's Main Street Spending Index (MSSI)

2008 Dec 15 11:50 AM

[livesinhiscar:]

That sure seems hard to believe.

Here is a quote from SBUX CFO:
"the company will not meet estimates for its 1st quarter of fiscal 2009 earnings results (ending December), as same-store sales have declined 9% since the credit crisis his the U.S. economy hard this quarter"

2008 Dec 15 11:51 AM

[igggy:]

> Starbucks customers are spending 36% more from a year ago.

Only if Starbucks has started selling gas along with their coffee.

2008 Dec 15 04:39 PM

[igggy:]

> Starbucks customers are spending 36% more from a year ago.

Only if Starbucks has started selling gas along with their coffee.

2008 Dec 15 04:39 PM

[swagvalance:]

Agreed with their CFO's comment a week or so ago. Either the data is faulty or someone is being deliberately deceptive. Neither bodes well for the company.

2008 Dec 15 07:06 PM

[John Gordon:]

We look at restaurant sector earnings and business conditions continually.

The posted Dunkin v. Starbucks comparison itself is faulty. They trade customers only in a very few places.

Dunkin is strongest in the Boston-NY corridor and is trying to add franchisees elsewhere and internationally. It is privately held and has a boatload of debt.

Starbucks is publicly traded, more globally positioned and has a lot more eyes on it. Nothing fundamentally has changed in its business model or macro/micro economics conditions to cause a sales gain.

John A. Gordon
pacificmanagementconsu...

Analytically focused restaurant analysis and management consulting

2008 Dec 16 12:16 PM