In the next four quarters, analysts expect Starbucks’s (SBUX) revenue to grow 9.4% YoY (year-over-year) to $25.7 billion, driven by SSSG (same-store sales growth), the addition of new restaurants, and growth in its consumer packaged goods (CPG) business. After the announcement of its fiscal second-quarter earnings on April 26, analysts were expecting Starbucks to post revenue of $26.1 billion in the next four quarters. However, on June 19, the company provided lower-than-expected SSSG guidance for the third quarter and stated that it would be closing 150 restaurants in fiscal 2019, prompting analysts to lower their revenue estimates.
Due to the mid-April incident in Philadelphia where two black men were accused of trespassing and arrested, Starbucks delayed launching its afternoon daypart marketing campaign by two weeks. The company has cited this delay as the reason for its SSSG decline. In China, its SSSG was impacted by a decline in delivery sales. The company claimed that delivery services provided by third-party companies were unsatisfactory, dragging down its delivery sales.
To overcome the SSSG decline, Starbucks is focusing on expanding and deepening its digital relationship with existing and new customers, forging a delivery partnership with a large technology company in China, menu innovations, and enhancing customers’ experience by opening roasteries, reserves, and Princi bakeries.
In the last year, Starbucks’s active Starbucks Rewards member count has risen 13% YoY to two million. It expects its digital initiatives to add 1%–2% to its US SSSG in fiscal 2019.
The company plans to open a Milan roastery in September, a New York roastery in November, and roasteries in Tokyo and Chicago in 2019. The company is also planning to build stand-alone Princi bakeries.