The company said Tuesday that customers flocking to Starbucks and ordering their passion fruit pineapple refreshments and iced shakes espresso helped drive the coffee giant’s revenue to a record $8.2 billion last quarter.
And while McDonald’s and other restaurants and food companies that have reported earnings over the past two weeks have noted that they’re starting to see customers slow down their spending or trade in cheaper items on their menus, Starbucks executives told their customers — specifically Generation Z — that they showed no signs of Reduce their intake of Dolce Latte chilled cinnamon anytime soon.
Howard Schultz, founder and interim CEO of Starbucks, said cold drinks, which made up 75% of beverage sales in the quarter, were a favorite of Generation Z because young consumers love to customize the drink and make it their own, then post the photos to social media.
“We’re in the early stages with cold drinks in rates and customization, and that gives us a competitive advantage,” Schultz said. He predicted continued profitability as more employees returned to offices and picked up their morning coffee on the way.
However, increased costs related to higher commodity prices and wages as well as COVID-related shutdowns and restrictions in China are eroding Starbucks’ overall profit. Operating income fell 13% in the April-June quarter to $1.3 billion from $1.5 billion a year earlier.
Schultz, who took the reins of Starbucks for a third time in April, most recently by Kevin Johnson, said he and his team have spent most of the past four months visiting Starbucks stores around the world and meeting with staff. Those meetings helped shape what the company in July called a “reinvention.”
Schultz also said that the company is interviewing potential candidates for the top job and that it will likely continue “for as long as necessary” to ensure the candidate has a smooth start. He said he would then move on to the board of directors to “guide and assist” the next CEO.