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Fri 28th Jul 2017 - Starbucks to close 379 underperforming Tevana sites
Starbucks to close 379 underperforming Tevana sites: Starbucks is closing all 379 of its tea-focused Teavana sites, mainly based in struggling shopping malls, because they are “persistently underperforming”. The company stated: “The company concluded that despite efforts to reverse the trend through creative merchandising and new store designs, the underperformance was likely to continue.” The majority will be closing by Spring 2018. The 3,300 employees affected can apply for positions at Starbucks stores, where Teavana drinks will be sold as well as at grocery stores. Starbucks said sales for the Third Quarter to 2 July grew to $5.66 billion, up 8% from a year ago but marginally short of expectations. Global like-for-like sales were up 4%. Focusing on its core coffee-shop business, Starbucks will take full ownership of all its stores in China. The company said it is spending $1.3 billion cash to purchase the remaining 50% of its joint venture business in China – the single largest acquisition in company history. The move means Starbucks will assume 100% ownership of about 1,300 stores in east China — spanning Shanghai and Jiangsu and Zhejiang provinces – in the country that represents the company’s fastest-growing market, in terms of store count, outside of the US. Starbucks currently has 2,800 stores in China. Aside from the 1,300 stores in east China, the remaining 1,500 are already fully company-owned. Starbucks plans to be operate 5,000 stores in China by 2021. In recent quarters, sales in stores in China open at least a year grew 6 to 7%, versus 3% in the US. “Starbucks’ growth potential in China is unparalleled,” Kevin Johnson, chief executive and president. Sales growth in China, as well as the US, helped account for an 8% rise in revenue in the third quarter, compared to the same quarter last year. In the US, like-for-like increased 5%, driven largely by an increase in how much an average customer spends. That’s compared with 3% growth the past two quarters. Johnson attributed part of the growth to innovations in food and beverage offerings, such as sous vide egg bites and more lunchtime offerings. The company has been focusing on lunchtime as an opportunity to sell more food. It has been testing a “Mercato” menu, featuring grab-and-go salads and sandwiches made fresh daily, at its Chicago stores. It will roll out the Mercato menu in Greater Seattle in early August, Johnson said. Like-for-like sales in China grew 7%, about the same as the previous two quarters. Globally, like-for-likes grew 4% companywide, below analysts’ consensus estimate of 4.8%, according to Consensus Metrix. The company continued its digital growth, with Rewards membership up 8% year-over-year to 13.3 million active members. Sales to such members represented 36% of sales at US company-operated stores. Sales via mobile order-and-pay increased to 9% of transactions at US company-operated stores. The company plans to allow non-Rewards customers to use mobile order-and-pay starting next year, Johnson said. He added that the company has made changes in its stores to help ease the congestion created by people waiting to pick up their mobile orders. Overall, the company logged $5.66 billion in revenue for the quarter ended 2 July. That’s up 8% from a year ago but still fell short of Wall Street analysts’ expectations of $5.75 billion, according to a Reuters consensus estimate. Earnings per share were 47 cents, which included an impairment charge largely related to the closure of the Teavana stores. Without that item, earnings per share were 55 cents, which met Wall Street expectations. The company opened 575 net new stores globally in the Third Quarter, bringing total store count to 26,736 across 75 countries.


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