Stores Starbucks Profit Jumps: The 'Flat White' Effect

Starbucks reported a surge of 7 percent in quarterly sales on Thursday. New, popular menu items and a digital initiative contributed to the rise in profits, the Wall Street Journal reported.

Global same-store sales grew seven percent this quarter, which ended June 28, and was driven by a 4 percent increase in customer visits. For the Americas division, same-store sales jumped 8 percent and total net profit in the period for the company grew 22 percent. Revenue for the quarter grew 17.9 percent to $4.9 billion, and Howard D. Schultz, Starbucks’ chief company executive, said there were 23 million new transactions, the New York Times reported.

“The past quarter stands among the strongest, most remarkable of quarters in the 23-year history of Starbucks as a publicly traded company,” Kevin Johnson, president of Starbucks, said in a phone interview, the New York Times reported.

The coffeehouse giant introduced several new items to its menu this quarter that were popular with Starbucks customers. The Flat White, a trendy espresso beverage made with two risotto shots and a thin layer of steamed milk, appeared on the menu in January and was an instant hit with coffee addicts. Starbucks also added bistro boxes, snacks, iced tea drinks and Frappuccinos to encourage people to come in more for afternoon and evening visits.

More customers were taking advantage of Starbucks’ loyalty program as well; Schultz said that the number of users in the loyalty program in the U.S. grew 28 percent from a year ago to 10.4 million, the Wall Street Journal reported. Transactions in the U.S. made using mobile devices also grew to 20 percent, up from 9 percent two years ago.

Scott Maw, chief financial officer of Starbucks, said that the acquisition of Starbucks Japan increased revenue this quarter by more than $300 million.

Starbucks said that they expect to full-year revenue growth to be on the lower end of the 16 to 18 percent range and for global same-store sales for the year to be in the mid-single digits.