Digital innovation is at the heart of Starbucks’ recent momentum, including a 4% jump in U.S. same-store sales for its most recent quarter, but the coffee giant is still having trouble cracking the code to unlock a traffic boost.
The Seattle-based company added 1 million active users to its app-based members-only program in Q1 2019—a year-over-year increase of 14% and the company’s largest jump since 2015—and now has 16.3 million customers enrolled in the rewards program, Starbucks executives told analysts during a call this week announcing earnings for the quarter that ended Dec. 30. Those loyal users typically outspend other customers, according to Starbucks.
Furthering its digital focus, the company, which recently revealed plans to expand delivery to six new cities in coming weeks, said it is working to upgrade its software so customers can place delivery orders directly through the Starbucks app and not just via Uber Eats.
Starbucks revenue increased 9% to $6.63 billion for the quarter. Transactions, however, remained flat, and the comps boost was due in large part to a 3% lift in average check size.
Starbucks shares were up about 2.6% midday Friday on the positive earnings news.
“We are particularly pleased with the sequential improvement in quarterly comparable store transactions in the U.S., underpinned by our digital initiatives and improved execution of our in-store experience,” CEO Kevin Johnson said. “This strategy is working.”
The company reported growth in iced beverage sales and announced plans to expand its nitro coffee line from 40% of U.S. stores this quarter to 100% of units by the end of the fiscal year.
“This platform is differentiated, provides theater and drives incrementality,” Johnson said.
Executives linked the same-store sales increase to solid holiday-season sales, including a strong gift card business and a successful limited-edition holiday cup promotion.
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