Brady Brewer, Starbucks’ EVP and chief marketing officer, spoke to the realities driving growth today. Thanks to COVID, digital ordering webs out differently than it used to, and it offers brands a chance to connect the experience for guests.
“There are few things that we're doing,” Brewer said. “One is we want to know as many customers as we possibly can. We want to personalize their experience, and we want to make the experience effortless. And so, effortless means things like mobile order, curbside, delivery.”
Stars for Everyone lowered barriers to entry so customers could access benefits and experience incentives and personalization. The pay-as-you-go option can’t be understated.
“Lowering those barriers to entry, reaching as many people with the program, and then ensuring that the incentives and the services that are attached to that program to make the experience personalized and effortless,” he said. “That's how we're growing the program, and we've seen just tremendous results obviously over the last six months with those programs attracting new members and seeing them activate.”
Johnson said Starbucks is working with tech companies that have machine learning algorithms, like Amperity (a company Johnson sits on the board of), to better serve and customize offers for digital users, including non-rewards members. “I think we've got a great set of features and initiatives that enhance the customer experience and how they want to use that mobile app to personalize that customer experience in ways that are relevant to them,” Johnson said. “And for us to find new ways to reach out to non-rewards customers and start to personalize our engagement with them to bring them into becoming Rewards customers.”
Brewer added Starbucks saw a significant number of occasional or lower-frequency customers join since it launched Stars for Everyone. That’s helping support the two- to three-times average versus non Rewards customers, in terms of frequency, Starbucks generally witnesses.
“We still see that high frequency overall for the program, but what's great about seeing those occasional customers join is that we also see that significant lift in frequency and spend from those members just as we do from the high frequency members that join,” Brewer said.
And that’s where a lot of the opportunity resides, and why 40 million members would be a category changer for Starbucks.
“We see a lot of runway there as Kevin said, and we'll continue to press on that in the months and years to come,” Brewer said.
Improving sales, drive-thru, and AI
Starbucks booked revenue of $6.7 billion in the quarter, up 11 percent from the same period in 2020. Net profit more than doubled, climbing to $659 million form $328 million, year-over-year.
While it’s difficult to really measure current results against a COVID lap, Starbucks’ U.S. comp sales in the month of March grew 11 percent on a cumulative two-year basis. That’s the point on which the company can tout a “full sales recovery.”
Comp sales skyrocketed 91 percent in China off the pandemic floor and global results lifted 15 percent, driven by a 19 percent increase in average ticket, partially offset by a 4 percent decline in transactions.
In the U.S., ticket hiked 21 percent and traffic fell 10 percent. Johnson credited the ticket growth to a combination of increased beverage attachment, premium beverage mix, increased customization and upsizing, and “all-time high” food attachment.
CFO Rachel Ruggeri said ticket should moderate as customer mobility improves. She anticipates store visitation frequency beginning to normalize in the latter half of the year. When that happens, traffic and ticket comp should shift.