Starbucks Store Traffic Isn’t Picking Up, But It Sees A Silver Lining

Like many food and beverage companies, Starbucks

SBUX
was battered by a disappearance of customers in 2020.

Some couldn’t go to Starbucks because of shutdown orders; others were working from home offices that weren’t close to a Starbucks; others chose to stay home in an effort to avoid Covid-19.

Placer.ai, which tracks retail foot traffic, estimates that Starbucks’ foot traffic still hadn’t recovered to year-earlier levels by the end of 2020, and in fact, the drop was deepening as the year came to a close.

But Monday, Starbucks CEO Kevin Johnson offered an explanation for the decline in traffic, which was off 23.7% in December from the same month in 2019, according to Placer.ai’s calculations.

Even as traffic fell, Starbucks noted that tickets—what the company calls individual sales—rose 19% in its most recent quarter.

In its quarterly conference call with analysts, Johnson said that group ordering is becoming a bigger factor for the coffee giant.

“Customers are coming in and they are purchasing multiple beverages, multiple food items for larger groups than in the past, which is why traffic is down and ticket is up,” Johnson explained.

That includes food orders, which Starbucks said were at an all-time high during the quarter.

Starbucks has been on an aggressive push in recent years to convince customers to sign up for its mobile app. In the most recent quarter, it said mobile orders made up 25% of its U.S. transactions, compared with 17% before the pandemic.

Starbucks said the number of people actively participating in the Starbucks Reward program rose by 2.5 million people during the quarter, to 21.8 million. It said the Rewards program activity rose 15%, year over year.

In all, Rewards members made up 50% of U.S. Starbucks sales during the quarter, compared with 43% in the prior year, and 47% in the previous quarter.

If you’re a Starbucks drive-thru customer, you may have noticed long lines lately. Rosalind Brewer, the company’s outgoing chief operating officer, said that drive-thru stores are Starbucks’ “most productive model.”

The coffee company has been on a push to build more of them, which will allow it to skirt the problem of Covid-19 related restaurant shutdowns.

“You’ll see an increased number of drive-thrus that we’re building in the central United States and across the southeast and the southwest,” said Brewer, who is tapped to be the next CEO at Walgreens Boots Alliance.

Along with that, Starbucks is implementing three types of technology to speed sales. One is the use of handheld point-of-sale terminals. These are currently in use at 300 stores, and Brewer said they will be operating at 500 stores by the end of February.

Starbucks also is renovating 150 stores that are drive-thru constrained, where space for drive-thru lanes is tight or short. And, it is pressing forward with drive-thru only stores, which it has introduced in selected parts of the country.

However, about 40% of its U.S. stores do not drive-thru. In these these, said Brewer, “We’re looking at everything to that we can do on the inside of the building.” That includes more-powerful espresso makers as well as new warming ovens.

The Starbucks executives said the company is trying to do more to match beverages with food, and to have each reflect shifts in consumer tastes. Starbucks recently introduced a plant-based breakfast sausage sandwich, joining its plant-based milks.

In fact, said Johnson, one store in Seattle only sells plant-based food items. Added Brewer, “We’re learning how to match and pair coffee with great food and beverage items, so that we bring together both a food and beverage combination.”