Starbucks is selling much more than coffee, but customers aren’t necessarily buying it

Obsession
How We Buy
Obsession
How We Buy

Starbucks wants you to buy its coffee … and pastries, smoothies, sandwiches, desserts, among lots of other confections.

In fact, the company is so intent on dolling out extras along with its coffee that it spent $100 million to acquire San Francisco-based bakery chain La Boulange last year. That’s after buying juice company Evolution Fresh in 2011 for $30 million. But has the in-store expansion strategy been working? That will be among the key questions as Starbucks releases second-quarter earnings later this afternoon.

Starbucks Sales Growth

The graph above shows Starbucks’ domestic and international sales growth, and the message to be had is a mixed one. While revenue has risen each year since dropping in 2009 after the economic collapse, Starbucks revenue growth has yet to reach pre-recession levels.

The company has preached the importance of growing same-store sales, which are those open more than a year, and posted same-store sales growth of 6-7% over the past three quarters. But only about a third of that growth came from people actually spending more each time they popped in for a coffee. Average spending per customer for last quarter was up a scant 2%, compared to actual store traffic, which rose 4%.

This all may reflect a simple truth: People aren’t as broke as they were back in 2009, but they might not be ready to splurge the way they once did.

the brief our picks popular latest obsessions search