The impact of traffic on Starbucks’ same-store sales

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Dec. 4 2014, Updated 12:41 p.m. ET

What are traffic and ticket?

In the last section of the series, we discussed same-store sales, a result of customer traffic and average check or ticket. An increase in traffic means more customers are visiting stores, and an increase in ticket means the average check the customer pays is higher.

Same-store Sales vs Traffic vs Ticket 2014-11-29

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Customer traffic down

Starbucks reported overall customer traffic growth of just 1% in the quarter, compared to 5% in the same quarter a year ago. A further breakdown of traffic by segment shows that China/Asia Pacific traffic grew by 6%, EMEA traffic grew by 2%, and the Americas traffic grew by 1%. When we compare the same-store sales with traffic in the above graph, we notice that it moves more or less in conjunction with traffic, meaning same-store sales are more impacted by traffic. Looking at it from another perspective, we can say that the more people who walk into the restaurant, the more transactions are made, and thus same-store sales grow.

Ticket per transaction increases

Starbucks’ ticket, or ticket per transaction, increased by 4% in the quarter compared to 2% in the quarter a year ago. Breaking the ticket down by segments shows that China/Asia Pacific grew by 4%, Europe, Middle East, and Africa (or EMEA) grew 2%, and the Americas declined by 1%. When we compare same-store sales with traffic, we notice the impact of ticket on same-store sales is not as pronounced as traffic. It’s important to keep a closer track of traffic as opposed to ticket.

Other restaurant chains such as McDonald’s (MCD), Dunkin’ Brands (DNKN), and Yum! Brands (YUM) do not give a detailed reporting of traffic and ticket, which leaves an investor to rely only on same-store sales for measuring performance. Investors who would like to invest in the restaurant industry as a whole can invest in exchange-traded funds (or ETFs) like the Consumer Discretionary Select Sector Standard & Poors depositary receipt (or SPDR) fund (XLY).

Starbucks is diversifying its portfolio. It owns Teavana, which we’ll look at next in more detail.

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