Starbucks, Coffee Drinkers Don’t Have Time for a Struggling Economy

Shares of Starbucks jumped more than 9% Thursday after the company posted better-than-expected Q4 earnings.

(Photo by Ben White on Unsplash)

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During tough times, people may make lunch at home, cancel a streaming subscription or two, drive less. But don’t even think about coming for the coffee.

Shares of Starbucks jumped more than 9% Thursday after the company posted better-than-expected Q4 earnings, highlighting how the coffee chain with more than 35,000 locations around the world might be the closest thing to recession-proof.

Don’t Talk to Me Before I’ve Had My…

Starbucks has had a tumultuous few years, with moves to unionize among thousands of workers, and longtime CEO Howard Schultz stepping down from his position and the board. Plus, there was that weird olive oil coffee that was upsetting customers’ stomachs.

But none of that matters much when customers jonesing for a caffeine fix keep walking through the door:

  • Starbucks reported $9.38 billion in revenue for the quarter, outpacing Wall Street’s predictions after coming up light in Q3. The company expects revenue to grow between 10% and 12% in its next fiscal year.
  • Price increases during pumpkin spice season — the holiest of all coffee seasons — haven’t deterred patrons either, as both global sales and average customer bills increased 8% and 4%, respectively.

New CEO Laxman Narasimhan teased a new strategic plan the company is calling the Triple-Shot Reinvention, which involves scaling the brand’s digital presence and saving $3 billion over the next three years, mostly in supply-chain improvements.

Chains that Never Break: Starbucks isn’t the only international brand that will likely be around till the Sun explodes. Earlier this week, Chipotle said Q3 revenue rose 11%, thanks to menu price hikes. The trend continued for McDonald’s, which beat Q3 estimates with revenue jumping 14%. Sorry, Disney, Max, Hulu, et al. When people can’t afford new homes and cars, what else are they going to spend their money on if not coffee, burritos, or burgers?