Same-store sales growth
Same-store sales growth (or SSSG) is expressed as a percentage, and it measures the rise in revenue from existing restaurants over a certain period of time. SSSG is driven by ticket size and traffic.
Fiscal 4Q16 performance
In fiscal 4Q16, Starbucks (SBUX) posted a system-wide SSSG of 4%. An increase in ticket size contributed to a 5% rise in the SSSG, while a decline in traffic offset this by -1%. The company claimed that the decline in traffic was due to the consolidation of tickets. The consolidation resulted from the shifting of the company’s reward program from a frequency-based to a spending-based model.
The Americas region posted SSSG of 5%. An increase in ticket size contributed to a 6% rise in the SSSG, while a decline in traffic offset this by -1%. The SSSG was driven by strong performance from the breakfast sandwich lineup and the Bistro Box platform during lunchtime. The core beverage products contributed approximately two points to SSSG, while the launch of Latte Macchiato, Coconut Milk Macchiato, Vanilla Sweet Cream Cold Brew, and Teavana Iced Berry Sangria contributed one point. The Mobile Order & Pay feature formed 6% of the total transaction.
The CAP (China and Asia-Pacific) region posted SSSG of 1%, driven by 6% SSSG in China. In China, the ticket size and traffic contributed equally towards the SSSG. However, negative SSSG from Japan offset some of the SSSG from this segment. The EMEA region posted SSSG of -1%. Ticket size fell 1%, while traffic remained constant.
With an enhanced customer experience and menu innovations expected to continue in fiscal 2017 as well, analysts are expecting Starbucks to post SSSG of 5.1%, 5.4%, 6.1%, and 5.2% in fiscal 1Q17, 2Q17, 3Q17, and 4Q17, respectively. Management has stated that that the SSSG for fiscal 2017 is estimated to be in the mid-single-digit range. In the first half of 2017, it expects the SSSG to be in the lower end of the range, and in the second half, it expects the SSSG to improve to the higher end of the range. Next, we’ll look at how Starbucks is expanding its business.