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Starbucks (SBUX) fans may be able to take a break from their bills in 2024.
The coffee giant is trying to keep more frequent coffee drinkers coming back amid ongoing challenges including unionization efforts, slowing sales growth in the U.S. and abroad, and flattening customer traffic. .
After U.S. same-store sales rose just 5% last quarter and fell short of analysts’ expectations for sales and bottom line Tuesday, Starbucks is looking to regain its footing this year with pricing and promotional strategies. We plan to make use of it.
Americans have ignored the price hikes until now, but Rachel Ruggeri, Starbucks’ chief financial officer, indicated to Yahoo Finance Live that the company plans to reverse the price hikes.
“We learned a lot in the first quarter, primarily in our U.S. business,” Ruggeri said, regarding driving promotional offers to attract consumers. The number of pedestrians in the United States increased by only he 1%, but check size increased by his 4%, both of which were below analysts’ expectations.
For fiscal 2024, Starbucks’ global and U.S. same-store sales are expected to increase by 4% to 6%, both down from the previous range of 5% to 7%. It ended trading down 1% on Wednesday.
“We had a good afternoon driving with them [promotional] Ruggeri added that Starbucks will adjust its promotions to be more “targeted and surgical” to increase efficiency.
Part of the plan is to leverage artificial intelligence to personalize promotions for different groups of reward members, target customers at different times of the day and suggest food based on their order. is. All of this increases traffic and ticket size.
The company’s U.S. compensation program was a rare bright spot in its first-quarter results. During the quarter, active Rewards members in the US who spend more than usual reached 34.3 million, an increase of 13% year over year.
Starbucks’ efforts continue to take place amid a backdrop of conflict with labor unions.
The Union strike took a toll this quarter, especially on the much-coveted Red Cup Day. Starbucks Workers United dubbed the strike the “Red Cup Rebellion.”
According to Placer.ai, the number of pedestrians that day was less than half of normal.
The number of store visits during Red Cup Day in 2020, 2021, and 2022 increased by 74.4%, 65.0%, and 81.0%, respectively, compared to the average daily store visits over the previous five days. In 2023, Red’s Cup Day visitor numbers increased by just 31.7%.
Starbucks CEO Laxman Narasimhan said on a conference call with investors that based on an independent assessment, “Starbucks does not have a strategy to crush unions.”
Noting that only 4% of Starbucks’ U.S. portfolio has voted to unionize, Ruggeri said the company “still believes that direct relationships with partners are best because they allow us to deliver the brand experience.” I believe,” he repeated.
But Starbucks is “committed to engaging in constructive dialogue with unions and all of our partners to chart a path forward,” she said.
But Starbucks Workers United tells a different story.
In a statement to Yahoo Finance, Starbucks Workers United said it “welcomes all efforts to foster relationships between the company and its partners that facilitate negotiations and allow them to organize without intimidation or retaliation.” Ta. “So far, there is no indication that they are sincere in their statements that they will change their stance on the union.”
As part of its growth strategy announced after its fourth quarter results in November, Starbucks aims to double the hourly wages of its 2020 workers by 2025.
Unions, meanwhile, feel like they’re being left out of the equation.
Their statement went on to say that Starbucks has a tendency to “fire workers, withhold new benefits from union members, and engage in other retaliation against union members,” adding that the coffee giant “has a tendency to terminate these ‘investments.’ “is being brandished as an anti-union weapon,” he added. ”
Starbucks stock is under pressure, down more than 15% from a year ago, while the S&P 500 is up 17%.
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Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter @brooke di palma Or email bdipalma@yahoofinance.com.
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