For Starbucks (SBUX 0.93%), being a global enterprise certainly has its benefits. Among other things, it gives the coffeehouse chain the ability to lean on different markets to drive growth. However, the coronavirus pandemic has complicated the picture. For example, in the latest quarter China's "zero COVID" policy caused same-store sales (or "comps") to fall 23% year over year there.
On the domestic front, it's a different story. With about two-thirds of Americans vaccinated, most restrictions have been lifted, and Starbucks was able to increase U.S. comps by 12% last quarter. Because it generates 66% of its overall revenue from the U.S. market, where it has 15,544 locations, this is clearly a positive development for the company.
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Benefiting from greater consumer mobility
When lockdown measures were put in place at thestart of the pandemic, Starbucks' same-store sales declined dramatically in the U.S. Given that the company benefits tremendously when people are out and about in their daily lives, it should be no surprise that when consumer mobility is on the rise, Starbucks' performance improves.
In its most recent quarter (ended April 3), U.S. transaction counts rose by 5% year over year, and the average ticket size was up 7%. According to data provided by the U.S. Department of Transportation, the number of miles driven in the U.S. continues increasing (year over year) with each passing month. This gives people more potential occasions to stop at a Starbucks for a beverage or snack. And the return of workers to offices and other on-site jobs also supports the company's sales.
High gas prices, though, could threaten this trend if people opt to drive less in order to save money in today's inflationary environment. Furthermore, many experts are worried a recession is on the horizon in the near term. Starbucks is a premium discretionary brand, and if economic times get tougher, one could expect consumers to reduce their spending on such purchases.
But despite these potential headwinds, Starbucks' leadership team says it is optimistic about the U.S. market. "Given record demand and changes in customer behavior, we are accelerating our store growth plans, primarily adding high-returning drive-thrus, and accelerating renovation programs so we can better meet demand and serve our customers where they are," said founder and interim CEO Howard Schultz in the earnings press release.
Starbucks navigated a turbulent environment over the past couple of years, doing its best to serve customers in ways that were most convenient for them. Thanks to its powerful global brand and long history of success, shareholders should have no worries about the company's ability to handle whatever is thrown its way next.
