Starbucks still needs to fix its biggest problem

Kate Taylor

Jan 26, 2018, 03:56 IST

Starbucks still needs to fix its biggest problem

Starbucks' traffic was flat in the most recent quarter.
This is a continuation of an ongoing problem, as the chain's traffic was flat overall in 2017.
Starbucks needs to find a way to convince more customers to visit stores more often.

Starbucks needs to find a way to convince customers to come to stores.

On Thursday, the coffee chain reported that global comparable sales grew 2% in the first quarter, but transactions were flat. Transactions were also flat in the US, with comparable sales increasing 2%.

According to CEO Kevin Johnson, the disappointing quarter was driven in part by holiday deals - including beverages, gift cards, and festive merchandise - that didn't sell as well as those from years past. The chain also struggled to draw in occasional, non-regular customers, especially at the mall stores that make up 6% of Starbucks' US locations.

The figures reveal that Starbucks still hasn't figured out how to boost traffic. For more than a year, Starbucks' primary sales drive has been customers paying more, as opposed to getting more visits from customers.

In December, Starbucks reported that global and American transactions were flat in fiscal 2017. The comparable sales growth of 3% in both categories was tied to a "change in ticket" - basically, by customers paying more per order because they bought more items or because items were more expensive.

Shares of Starbucks slumped as much as 4% after-hours on Thursday. The coffee giant said it earned an adjusted $0.65 per share - 14% above the expected $0.57 - on revenues of $6.073 billion. Analysts had expected $6.2 billion.