Starbucks customers are placing bigger orders than they ever have before
- Starbucks customers at US stores are spending more per order than ever before, execs said Tuesday.
- Customers are opting for pricier products, adding more customizations, and getting more cold drinks.
Starbucks customers at US stores are spending more per order than they ever have before, executives told investors during the coffee giant's earnings call on Tuesday.
CFO Rachel Ruggeri said that comparable sales in the US saw a 4% growth in average ticket size — the average amount a customer spends per order — in the quarter year-over-year.
Ruggeri attributed the record ticket sizes to the specific products customers picked, rising menu prices, and the number of customizations they added to their beverages.
Starbucks said last summer that it had made some "judicious price increases" without specifying which items were impacted. Business Insider contacted the company for further comment but didn't immediately hear back.
Custom beverages drive high ticket prices
CEO Laxman Narasimhan said that high sales of cold drinks — which are generally more profitable for the chain because customers add more costly modifications to them — and its gingerbread range helped drive the ticket prices during the most recent quarter.
Customizations are a major driver of high ticket prices at Starbucks, which cost around $1 individually but can easily add up and double the price of a drink.
These include topping a drink with whipped cream or sauce, changing the milk type, and adding syrup or another shot of espresso. Starbucks previously said that more than half of its beverages sold include modifiers.
Starbucks' cold foam, which generally costs $1.25, is its most popular add-on, company executives said last summer. It can be added to cold drinks, which are generally more customizable than hot ones.
Starbucks has now rolled out its Oleato olive-oil-infused range at all its US stores, and as part of that customers can pay $1 or $1.25 extra at most locations to add a swig of olive oil to other drinks, like mochas and Frappuccinos. They can also pay extra to add Oleato Golden Foam to their drinks.
Another factor that helps push up order sizes is what the industry dubs "food attach," or the number of customers adding food to their order alongside their drink — something Starbucks is currently focusing on.
Ruggeri said last summer that two in every five customers added food to their order, and execs said at its earnings call in November that this area of the business remained strong through the fall.
Food made up 18% of its consolidated revenue at company-operated stores in the year to October 31, 2023.
Narasimhan said on Tuesday that Starbucks was introducing more food to appeal to different parts of the day, especially the afternoon.
He said that there'd been a good response from customers to the new menu items launched in January, including the potato cheddar and chive bakes and the chicken, maple butter, and egg sandwich, which he said were designed to "tide our customers over between lunch and dinner."
The average ticket was up 2% globally, based on comparable store sales. In Starbucks' international markets, however, average ticket size fell by 3%, including a 9% drop in China which the company attributed to lower merchandise sales and more promotions.
Starbucks reported record consolidated net revenues for the quarter of $9.4 billion, up 8% from the prior year.
It said that gift card sales were also the highest in the company's history, with $3.6 billion uploaded to cards in the quarter. A record number of Starbucks orders — around 30% — are now placed via its app, and its US delivery business has grown nearly 80% year-over-year, Narasimhan said on Tuesday.
Store efficiency also increased, Ruggeri said, with a record number of items made per labor hour.
But Narasimhan noted that lower sales in the Middle East, "misperceptions" about the company's position on the conflict in Gaza, and "cautious consumers" in China had stinted the company's growth rate.