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Starbucks’ Lobby Sales Contribute 5% To Revenues

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Lobby sales

In the last part of this series, we learned that Starbucks (SBUX) is expanding its dayparts to increase sales at each restaurant location. As a result, SBUX will gain higher operating leverage. SBUX is also focusing on lobby sales to increase revenues at each store. Let’s look at this below.

At SBUX, lobby sales mean the sale of its coffee, tea items, and merchandise in the store lobby. This includes seasonal gift items, mugs, coffee and tea blends, coffee presses, and cocoa treats. The Verismo coffee makers can also be purchased in the store lobby.

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Revenue contribution

Currently, ~5% of SBUX’s total revenues come from lobby sales. Earlier in this series, we discussed that transactions are important for growing sales. Lobby sales account for ~3% of the transactions. Lobby sales grew 1% on a year-over-year, or YoY, basis.

Several restaurants tried many initiatives to increase incremental store sales. Yum! Brands (YUM) operates Kentucky Fried Chicken, or KFC, Pizza Hut, and Taco Bell. They introduced late night snacks. McDonald’s (MCD) is focusing on the breakfast daypart.

Some of the restaurants mentioned above are also included in the SPDR S&P 500 ETF (SPY). SPY also includes big retailers like Walmart (WMT).

SBUX is also growing its sales by adding more units. In the next part of this series, we’ll look at SBUX’s unit growth by region.

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