What Are Starbucks’s Same-Store Sales Growth Expectations?

In the last part of this series, we looked at Starbucks’s (SBUX) revenues and Wall Street analysts’ expectations for the upcoming quarter. Revenues are driven by the following two factors in a restaurant café business: same-store sales and unit growth. We’ve already seen that Starbucks’s year-over-year same-store sales growth is declining.

In the above chart, you can see that analysts estimate Starbucks’s same-store sales growth in the first quarter to be lower at 4.75% compared to 5% year-over-year. Same-store sales growth also declined sequentially from 5% in 4Q14.

This lower same-store sales growth expectation may stem from the shifting trend that shows restaurants trying hard to keep up with Millennials.

Relatively newer concepts such as fast casual and fine casual are replacing older fast food and casual dining restaurant concepts. Some well-known fast-casual restaurants such as Chipotle Mexican Grill (CMG) and Panera Bread (PNRA) have thrived, while Noodles & Company (NDLS) and Potbelly Corporation (PBPB) have not done so well. The Consumer Discretionary Select Sector SPDR ETF (XLY) is a good way to hold several restaurants, including Chipotle Mexican Grill (CMG).

Shake Shack Inc. (SHAK), which recently filed for IPO (initial public offering) calls itself a fine casual restaurant chain. Read a complete overview on the Shake Shack IPO filing at Shake Shack Filed For An IPO—What Investors Need To Know.

In the next part of this series, we’ll look at unit growth, the second-most important driver for restaurant revenues, especially for Starbucks.