Results like these are important to Starbucks (and other like-minded chains) given the challenge faced by brands that rely on routine-fueled traffic. “With morning visits moving back toward normalcy, signs of a more ‘routine’ routine are emerging. And if the brand can combine that return with its consistent ability to control the calendar just as we begin their key season—the short-term future for Starbucks could be bright, even under the crazy circumstances of 2020,” Ethan Chernofsky, VP of marketing at Placer.ai, said.
Starbucks’ Pumpkin Spice Latte (and related fall products) hit stores August 25. If that felt especially early, you’re not stuck in a COVID-19 time warp. The date marked the earliest recorded release day in Starbucks’ history of the famed PSL, which dates back 17 years.
And still, it lagged Dunkin’s pumpkin-centric lineup by six days.
In a major understatement, this is an interesting time for fall classics. Many of America’s yearly rituals, like back-to-school and college football, have been tossed in the pandemic blender. Perhaps that’s why chains are rushing to provide a sense of the familiar during unfamiliar times. Yet there’s likely more to it.
As The NPD Group points out, PSL offers aren’t necessarily designed to attract new customers. They historically appeal to existing or core guests who attach the occasion to a sense of place, or timing. And they purchase often, sometimes three times more frequently than non-buyers, NPD said.
According to the company’s Checkout, which gathers restaurant and retail receipts from an omnichannel panel of more than 130,000 customers, fall spending habits have remained consistent going on four years. PSL limited-time deals also help lift check size.
In one example, among existing buyers of a “major gourmet coffee chain,” NPD said, checks last September and October that included PSLs were $2.77 more than the average spend in previous months. Value just isn’t as critical to the consideration set when a guest knows exactly what they want and isn’t willing to trade up or down the menu ladder, or anywhere in between.
Generally, NPD said perennial purchasers of PSLs tend to have higher incomes, 61 percent boast a household income of $75,000 and above. They skew slightly more female (57 percent) and 48 percent are 45 years and older. Additionally, 65 percent of PSL aficionados do not have children under 18 in the household.
So will COVID-19 swing a hammer through this trend as it has others? Although the COVID pandemic hasn’t altered this year’s PSL offers, it could impact sales as the U.S. restaurant industry continues to be challenged by mandated restrictions and safety protocols, as well as reluctance on the part of the consumer to visit, NPD said.
Restaurant visits overall declined 14 percent in July. Visits to quick-service coffee and doughnut outlets are down 23 and 13 percent, respectively. You can thank virtual back-to-school disruption, morning routine changes, and remote work adjustments.
However, a product like the PSL might find life beyond the a.m. daypart. Dunkin’s new Signature Pumpkin Spice Latte is available hot or iced (espresso with pumpkin and vanilla flavors, topped with whipped cream, a caramel drizzle, and cinnamon sugar topping).
And guests can add pumpkin flavored swirls to hot or iced coffees, Chai Lattes, Cold Brew, espresso drinks, frozen coffee, and frozen chocolate.
Starbucks’ Pumpkin Cream Cold Brew, topped with a pumpkin cream cold foam and pumpkin spice topping, returned for a second year along with the PSL. The chain even introduced a 1-833-GET-FALL hotline inspired by customers’ love for the sounds and flavors of fall. Guests call in and hear things like a crackling fire, hayride through a pumpkin patch, and “PSL-inspired meditations.”
For both, however, it’s a PSL season piggybacking COVID-19 developments, which have pushed a steady amount of business into mid-morning and early afternoon hours. Dunkin’ has circled the 11 a.m. to 2 p.m. window in recent reports as a pandemic growth zone to help offset morning softness.
Read more about how Dunkin’ is meeting that demand here. One thing, however, to note is how Dunkin’ has leveraged incentives to break customers out of their quarantine fog. Free Donut Fridays and Free Coffee Mondays. Seasonal product launches (even when they’re not quite in season), like PSL lineups, can provide that nudge, too.
Starbucks is hardly sitting pat, rethinking its entire footprint and accessibility model, with a heavy emphasis on drive thru and mobile ordering. And cold beverage innovation has turned the wheel for some time.
So it’s not surprising to see PSL platforms, for both coffee giants, speak to multiple occasions. The idea of serving customers wherever and whenever they want to be served.
But how has it gone so far?
Placer.ai, a mobile location analytics platform, took a look at Starbucks’ PSL experience in 2020. Starbucks, of course, is no stranger to seasonality. It has always launched products to embrace or combat yearly tends. In 2019, it activated a Tye-Dye Frappuccino in July to reverse summer lulls, and it often reserves big hitters for prime spots—fall, Christmas, etc. Typically, Starbucks enjoys fall and winter peaks and dips in summer. You could say launching PSL season early this year was a good way to say goodbye to a difficult period. It’s turning the mental page.
Since the start of the COVID-19 recovery, Starbucks’ visits peaked in the week beginning August 17, when traffic came within 20.1 percent of 2019 levels, Placer.ai data showed. Yet the Saturday and Sunday following PSL’s early launch were within 7.7 and 6.2 percent of year-ago metrics—even with the peak those days enjoyed last year. It essentially provided a 13 percent or so boost.
He adds retail brands, broadly, can take a page out of Starbucks’ playbook to weather the crisis as we navigate into the holiday calendar. That might just mean getting ahead of it when customers need a break from the monotonous grind of pandemic life.
If Thanksgiving is removed as a retail holiday, for instance, it could drive more buzz to Black Friday or give restaurants an opportunity to create their own “days” throughout the season. They can control the calendar. “Is the latter ideal? "No,” Chernofsky said. “There is an obvious benefit to a wider sense of retail urgency that brings visitors into malls and shopping centers. However, even if it just mitigates losses the results could be significant.”
In other terms, how Starbucks created a fall holiday in August with a product launch and marketing rush, retailers of all sizes can attempt to follow suit. It's the retail concept of "owning the calendar," where you don't wait for a certain date to introduce a traffic-boosting promo—just pretend as if it's that moment and go forward. In a world where nobody even knows what day it is anymore, it suggests a powerful lever for brands to pull.
“And if elements of the holiday season proceed as normal, there are still lessons to be applied,” Chernofsky added. “Whether it be the ability of a food brand to hijack Black Friday—the strongest day for Starbucks visits in 2019—or leveraging Prime Day for offline visits or finding unique promotions that drive buzz this winter, utilizing the calendar to its fullest extent is a critical asset for top brands.”