The quarterly revenue of
in China plunged by 40%.
In the two core regions of the world, China and the United States, Starbucks is in a dilemma.
according to the report of the third fiscal quarter of fiscal year 2022 released by Starbucks as of July 3, the total revenue of the third fiscal quarter was US $8.15 billion, an increase of 9% year-on-year; The net profit was US $910million, a year-on-year decrease of 20.9%.
In the United States, the largest market of
, Starbucks had a revenue of US $5.62 billion, a year-on-year increase of 13%. Thanks to the increase of 8% in average customer unit price and 1% in passenger flow, its same store sales increased by 9%. Up to now, the number of paid members of Starbucks has increased by 13% in the United States, reaching 27.4 million.
Howard Schultz, interim CEO of Starbucks, said that despite inflation, American consumers have not reduced or reduced their spending on coffee. As other catering companies, including McDonald’s, have warned that higher natural gas and grocery bills are reducing the frequency of customers’ visits to the store, Schultz responded that Starbucks’ pricing power and customer loyalty will enable it to rise against the trend.
but in China, the second largest market, Starbucks is still suffering from a continuous decline in sales. In the third fiscal quarter, Starbucks China’s revenue was US $540 million, a year-on-year drop of 40%. Affected by the drop of 43% in passenger flow and 1% in average unit price, Starbucks China’s same store sales dropped 44%.
The direct impact of the decline in the performance of
in the Chinese market is that the revenue of Starbucks’ international departments except North America decreased by 6% year-on-year and the same store sales decreased by 18%. Schultz explained that “this is mainly due to the restrictions related to covid-19 in China and the impact of foreign currency conversion from China.”
according to Schultz, part of the loss from the decline in revenue in the Chinese market is being offset by the growth in Starbucks’ franchise store revenue, including higher product sales, royalty revenue, and the growth brought about by the transformation of the Korean market from joint ventures to full franchising. In the third fiscal quarter of
, Starbucks opened 318 new stores worldwide, bringing its total number of stores to 34948, of which 51% were self operated stores, 49% were franchised stores, and 61% were stores from the United States and China. So far, Starbucks has 15650 stores in the United States and 5761 stores in China. The
benefited from the earnings and revenue data higher than Wall Street’s expectations, and Starbucks shares rose more than 1% after hours. However, Starbucks’ share price has fallen by more than 30% since this year.
at the financial report meeting, Schultz reiterated his emphasis on the Chinese market and believed that “Starbucks’ business in China will eventually surpass that of the United States”. In order to realize this vision, Schultz also needs to lead Starbucks to continue to inject blood into the Chinese market.
Since the beginning of fiscal year 2022, star
Where does the money come from? Schultz’s method is nothing more than “reducing cost and increasing efficiency”.
according to the times, Starbucks is planning to sell all its businesses in the UK in the face of the uncertain and increasingly fierce UK market brought by the epidemic, and is currently looking for external consulting companies to cooperate. Starbucks responded by saying that it would continue to “weigh strategic options” for its international direct business in the future.
entered the UK one year earlier than the Chinese market. At present, there are about 1000 stores in China, of which about 30% are direct stores. BBC analysis believes that the changes in consumer habits brought about by the epidemic have forced most enterprises to adjust their responses, resulting in rising costs. In addition to the sale of the international business of
with uncertain prospects, Schultz is also trying to tap the most profitable potential in the United States, such as increasing the customer flow of stores and enhancing employee efficiency.
at the DealBook DC forum held by the New York Times in June, Schultz proposed to abolish the free open toilet policy in the United States. The reason given was that with the increasingly serious psychological crisis of people, opening public toilets would bring potential safety risks to Starbucks customers and employees.
however, according to CBS News, from a commercial perspective, this may be understood as Schultz’s attempt to boost passenger traffic. One study pointed out that after Starbucks opened its toilets, the number of customers in its stores dropped by 6.8% compared with its competitors, and the time spent in Starbucks was also 4.2% lower than that of its competitors. This is not the first time Schultz has done this for
to sell its regional business and reshape its corporate culture. As early as 2007, when Starbucks was in crisis due to its rapid expansion, Schultz, who came out of the mountain again, made the concept of “third space” take root in Starbucks through radical “slimming plan” and measures such as rebuilding relations with customers and communities, and successfully led Starbucks out of its predicament.
at present, Schultz began to “repeat his old skills”. In July, in a letter to Starbucks partners, Schultz shared a series of new principles and new partnerships with a view to reshaping Starbucks into a new chapter.
mentioned that Starbucks needs to re inspire and cultivate the spirit of employees. Schultz is not alone in worrying about employee efficiency. Like Google, it also began to launch a rationalization proposal solicitation plan called “simple cycle” internally. Google CEO Pichai clearly pointed out that Google’s current production efficiency does not match the total number of employees. He hoped that employees would help the company create a new corporate culture, pay more attention to the company’s mission and vision, and put more energy on products and customers.
for Starbucks, a major means to stimulate employee efficiency is the adjustment of the salary system. On the first day of taking over the post of CEO of Starbucks in April this year, Schultz announced that he would stop the stock repurchase program of Starbucks. One of the purposes is to invest more profits in employees to enhance the attraction to talents.
is not only for the United States, but also for retaining talents
Financial report interpretation: Starbucks blood transfusion cannot catch up with bleeding