Monday, December 15, 2008

Starbucks Defies Economic Logic With Late Rally

Despite the sluggish economy and Starbucks (NASDAQ:SBUX) has made a comeback. For some inexplicable reason, Starbucks' cash-strapped consumers are returning to the high-priced coffee. Perhaps it's partially related to the number of Target stores that offer Starbucks in their cafe and more shoppers during the Christmas season. Whatever the reason, they're visiting more often and spending more at the national chain.

Geezeo consumer data,the Main Street Market Report, showed a resurgence in customer spending and loyalty.Geezeo's report predicted  Starbuck’s growth to continue as people treat themselves to smaller items like fresh brewed coffee, and cut back on larger ticket items like dining out.
 

 

The average customer visited Starbucks 3.7 times a month in November compared to 2.9 times a month last November 2007. 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.   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.

 

The only stat that didn't surprise me in Geezeo's breakdown was the amount spent per visit. Starbucks' is priced more than Dunkin Donuts, so it's only natural to assume the customer will spend more each visit.

Smartmoney's 3-month graph reflects the recent upswing for Starbucks.The shift is a reversal of fortune for Starbucks, because it comes only a few months after the gourmet coffee company  announced it was closing 600 U.S. stores- including 200  closures in the fourth quarter. Coincidently, Starbucks just announced its plans to sell several of its brands- Seattle's Best Coffee, Henry's Blend and 6th Avenue Bistro Blend in 1,900 Subway sandwich stores next month.

Personally, I've started to make my own flavored coffee with Nestle Coffee-Mate Creamer. It's not as as good as Starbucks, but for the price of a medium latte at Starbucks, I can get a pint worth of Coffee Mate for at least a dozen cups.
We're curious if the economy has affected your coffee preference, so tell us if you're still loyal to the nation's most popular coffee company.

By Matt O'Hern at 10:35 AM | Comments (4)

(4) Thoughts on Starbucks Defies Economic Logic With Late Rally

Maybe this has something to do with people purchasing gift cards at Starbucks. Even though it is November data, maybe there was an upswing in both sales and amount per purchase due to gift cards.

Just a thought.

Dan

Comments by Dan Englander : Monday, December 15, 2008 at 11:13 AM

Gift card sales do not count toward sales data at ALL. They don't count until people actually use them.

When will you marketing people get it through your heads that Starbucks will never follow your text-book, college marketing class model. It borders on a RELIGIOUS experience for most people. Also, since they are spending less $$ on big ticket items they can spend more on more frequent Starbucks visit as a "reward" that scratches that itch.

For the record, a cup of coffee in a personal cup is only $1.65, not $4.00.

Comments by Ettal : Monday, December 15, 2008 at 02:06 PM

Duncan offers only Fair Trade certified coffees. Starbucks has a higher standard than Fair Trade.

Fair Trade is really the least you can do for a coffee growing community.

So if your in to barely keeping coffee growing communities alive keep drinking Duncan.

If you have compassion enough to take care of everyone from the firld to the store drink something with a higher standard SBUX.

Comments by Nick : Monday, December 15, 2008 at 06:39 PM

Duncan offers only Fair Trade certified coffees. Starbucks has a higher standard than Fair Trade.

Fair Trade is really the least you can do for a coffee growing community.

So if your in to barely keeping coffee growing communities alive keep drinking Duncan.

If you have compassion enough to take care of everyone from the field to the store drink something with a higher standard SBUX.

Comments by Nick : Monday, December 15, 2008 at 06:41 PM

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