Starbucks Corporation (NASDAQ:SBUX), as the premiere roaster and retailer of specialty coffee in the world, continues to extend its commitment to wellness and will include calorie information on menu boards at all company-operated and licensed U.S. Starbucks stores starting June 25. By raising its standards, Starbucks Corporation (NASDAQ:SBUX) also delivers solid results for its shareholders.
The company is targeting to deliver 10%+ revenue growth on a sustainable annual basis. Starbucks Corporation (NASDAQ:SBUX) has achieved between 12% and 14% revenue growth in 2012, and expects to deliver between 10% and 13% revenue growth by the end of the year. As for earnings, Starbucks is aiming for 15% to 20% sustainable growth, whereas the company has delivered compound growth rate and earnings of 19% over the past three years.
What is Starbucks doing?
Starbucks Corporation (NASDAQ:SBUX) continues to work on the food quality and innovation to pursue two opportunities: attach more food to the existing transactions and attract new customers into the stores. On the beverage end, the company continues to focus on beverage innovation, such as the Hazelnut Macchiato and Vanilla Spice Latte, which helped improve incremental comps by about two points in Q2.
In addition, the management also sees great opportunity for drive-through as the company continues to improve its drive-through operation. Lastly, with the acquisition of Teavana, it provides Starbucks Corporation (NASDAQ:SBUX) three growth opportunities: open new Teavana stores with stronger offerings, use tea as a growth driver in the Starbucks stores, leverage into consumer packaged goods (CPG) channels over time with Teavana.
Home consumption
As the coffee consumption at home becomes more convenient and easier, Starbucks is innovating aggressively into the home space with packaged coffee. While most consumption at home in the U.S. is in the low-pressure brewed category, Starbucks’ partner Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) has successfully penetrated the market with its Keurig system. Starbucks sees higher consumption of coffee driven by single-serve executions and intends to provide coffee on other platforms. By recognizing itself not as an equipment company, Starbucks will continue to strengthen its relationship with Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) to grow into the home space.
Competitions
As Starbucks continues to drive into food area, the competition against McDonald’s Corporation (NYSE:MCD) McCafé is expected to intensify. By introducing two new offerings, Blueberry Pomegranate Smoothie and Dulce de Leche Shake, McDonald’s Corporation (NYSE:MCD) continues to expand its offerings with new, great-tasting beverages and desserts. By optimizing its menu, modernizing the customer experience as well as broadening the accessibility, McDonald’s continues to post solid results, where its global comparable-store sales increased 2.6% in May. However, with differentiated offerings and core strengths, such as Starbucks’ premium coffee and McDonald’s burgers, both companies are finding ways to boost traffic and revenue.
