Starbucks Is Expanding Dayparts To Grow Sales

In the last part of this series, we learned about Starbucks’ (SBUX) personalized marketing. It’s meant to help generate higher sales at its locations. SBUX is also expanding its offerings in different dayparts. The expanded offerings cater to a wider customer base. They increase the wallet share. Wallet share is the amount a customer spends at a restaurant brand.

In the above chart, you can see the breakup of consumer dollars spent at QSR (quick-service restaurants) at SBUX. 85% of consumer dollars spent at a QSR can be divided into four dayparts:

1. morning
2. lunch
3. afternoon
4. evening

Consumer spends during the lunch and evening time is higher at QSR—compared to the morning and afternoon.

For SBUX, the morning daypart receives the highest consumer dollars—compared to the lunch, afternoon, and evening dayparts. By increasing offerings during the lunch, afternoon, and evening dayparts, SBUX can leverage its existing locations and increase revenues.

The increased leverage will result in the fixed cost spreading over higher sales volumes per store. SBUX introduced the La Boulange food platform in its stores in the US. The company has also started a lunch platform. During the 3Q14 earnings call, management stated that its breakfast sandwich, for the morning food platform, grew 30% year-over-year, or YoY. Lunch grew by 14% YoY.

QSR includes restaurants like McDonald’s (MCD), Taco Bell under the umbrella of Yum! Brands (YUM), Burger King (BKW), and Wendy’s (WEN). Some of these companies are included in the SPDR S&P 500 ETF (SPY).