Starbucks pins future growth on afternoon sales

The coffee chain reported modest sales increases for its second quarter.

Starbucks is banking on a targeted marketing campaign to drive much-needed afternoon traffic.

The campaign, slated to roll out next month, seeks specifically to boost frequency among afternoon guests, whom the chain says are not as familiar with its offerings as Starbucks Rewards members. The campaign will also focus on iced drinks, which accounted for nearly 40% of the brand’s overall revenue growth in the second quarter, Starbucks said in an earnings call this week. The chain recently launched iced drinks topped with cold foam, a creamy layer of froth that’s typically seen on hot drinks.

What the marketing campaign won’t hinge on, however, is limited-time offers. Starbucks plans to reduce its number of LTOs 30% year over year.

“That gives us a chance to simplify the work in the afternoon so partners can engage with the customers,” said Rosalind Brewer, Starbucks’ chief operating officer, during the call.

The campaign, which will run through August, is part of “an ongoing shift in marketing” that focuses on a continuing relationship with customers, Matthew Ryan, the chain’s global chief strategy officer, said during the call.

The fresh afternoon focus will coincide with the launch of a new Frappuccino, which will become a core offering on the blended-beverage platform. Starbucks executives did not provide any further details on the new drink.

Last month, Starbucks launched its revamped happy hour program as an invitation-only promo, solely for users of the chain’s app or those who’ve otherwise provided their email address to the company.

The new happy hour—which focuses on the chain’s broader drink lineup, not just Frappuccinos, and extends beyond the warm seasons—allows for more predictable traffic flows spread over many months, boosting labor efficiency for the chain, executives said this week.

“Our customers love cold beverages, and not just in the summertime,” Brewer said.

The coffee giant’s same-store sales increased 2% for the quarter ended April 1, up from the same period a year ago, Starbucks officials said.

Further, the Starbucks Rewards loyalty program added 1.6 million users, up 12% year over year, with those users accounting for 39% of all sales.

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