The Channel Checkers are observing an interesting trend in our Starbucks research. It appears that despite the buzz about Pike’s Peak coffee that sales of drip coffee are actually slowing.
43% of employees in a recent Starbucks survey stated that 30%-50% of their customers come in more than four times per week. Sales of plain drip coffee are weak, with 55% stating that drip coffee accounts for less than 10% of their sales, up from 34% in April. 75% of customers stated that they order a specialty drink rather than drip coffee, up from 71% in April.
One of our partners, wrote to us in response to this piece:
“To counter the perennial issue of burnt coffee, Howard Schultz rolled out Pike’s Peak, a milder roast. If drip coffee is falling from a sales mix standpoint, that gives clues as its performance and also margin: the drip coffees have a much lower gross margin per drink versus a espresso/mixed drink beverage. SBUX is claiming its drip coffees are up in the WSJ article.”
Starbucks crummy drip coffee could actually be leading to better gross margins which might be amplified by recent cost cutting efforts as well.
We’ll see on July 30th.