Outside Insights | September 2017 | By Guest Author

Just How Dominant is Starbucks' Pumpkin Spice Latte?

During the week leading up to the PSL introduction, Starbucks held 67.5 percent of the national market for coffee based chains.
Starbucks' Pumpkin Spice Latte is the thing of quick-service legend at this point. Starbucks
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Starbucks has been in the news headlines plenty this year for innovating its menu with the launch of its brightly colored unicorn drink, which drove “significant traffic.” Fall, however, seems to be the time when Starbucks gets to truly flex its specialty flavor muscles with the return of its ever-popular pumpkin spice latte. The PSL—for the “initiated”—is in its 14th year. With this, we wanted to take a look at the impact the drink had on Starbucks’ bottom line last year to help inform others in the quick-service space about what to expect this year. 

How Popular is the Pumpkin Spice Latte?

Despite being popular enough to have garnered a cult-like following and its own acronym, Starbucks won’t say how much money it makes from the PSL alone, and other reports are left to speculate the potential correlation between increased third quarter 2016 revenues and the release of the drink.

At Sense360, a real-time data insights and consumer intelligence company, we are able to measure visits to every Starbucks location in the United States both before and after the reintroduction of the PSL. From this, we can paint a clear image of PSL’s powerful appeal.

What Was the Impact in Fall 2016?

Between 7 a.m. and 9 a.m. on September 5 and 6 in 2016, Starbucks added over 150,000 visits for each day. During the week leading up to September 5, Starbucks held roughly 10 percent of the national quick-service market overall, making them a top player. In the week after September 5, Starbucks share jumped by 6.96 percent.

Who Can’t Get Enough PSL?

Sense360’s data found that the extra 150,000 people who rushed Starbucks for their PSL fix first thing on the 5 and 6 of September 2016 were unique in a few ways. As compared to the rest of quick service and Starbucks customers, they were 48 percent more likely to go to the gym, 54 percent more likely to go to a nail salon, 41 percent more likely to go to a clothing store, 89 percent more likely to go to a jewelry store, and 53 percent more likely to go to a beauty salon. How do they finance all of these purchases? Well, 45 percent of them had a household income of over $80,000.

How Did The Drink Affect Market Share?

With respect to the quick-service market for coffee-based restaurants specifically, the change is even more apparent. During the week leading up to the PSL introduction, Starbucks held 67.5 percent of the national market for coffee based chains, putting it miles in front of Dunkin’ Donuts, with 20.5 percent, Einstein Bros, with 3.5 percent, and Tim Hortons, with 2.7 percent. In the week following the return of the PSL, Starbucks even further increased its lead, owning 69 percent of the market.

In this time period, Dunkin’ Donuts dropped 3 percent, from 20.5 to 17.5, while Einstein Bros and Tim Hortons remained relatively constant. On the national level, Starbucks’ reintroduction of the PSL enabled it to effectively steal three percent of the market from Dunkin’ Donuts.

Starbucks vs. Dunkin’

Starbucks’ poaching of Dunkin’ Donuts’ customers is particularly evident in the Boston market area, where Dunkin’ Donuts enjoys an unusually high local market share. During the week before September 6, 2016 Dunkin’ Donuts held nearly 72 percent of the local quick-service coffee market, while Starbucks held under 26 percent. Bostonians do love their Dunkin’. During the week following the return of the PSL, however, Dunkin’ Donuts dropped more than 5 percent to 67, while Starbucks surged more than 4 percent to roughly 30.5. 

The Future of Fall Flavors

Starbucks has ushered in an impressive wave of foot traffic for their locations across the nation with the PSL. Early data from the 2017 “PSL season” shows no sign of slow-down either. Given the substantial market power of the seasonal beverage after all these years, Starbucks would seem unlikely to change course with the PSL in the years to come. The PSL demonstrates the potential advantages of seasonal offerings for quick-serves, which can be strategically timed to garner foot traffic and consumer attention, in addition to bolstering consumer loyalty. With the kinds of tangible returns Sense360’s data shows, other coffee-based quick-service restaurants would be wise to follow in Starbucks’ footsteps by investing in strong seasonal products and marketing.

Eli Portnoy is the co-founder and CEO of Sense360, a real-time research and intelligence company that enables continuous optimization of business strategies and tactics. Previously, Eli was the co-founder and CEO of Thinknear, a location-based mobile ad network, which was acquired within 19 months of inception by Telenav.