Starbucks is now selling 46% more things an hour than it was five years ago

November 25, 2013 Leave a comment

Starbucks is now selling 46% more things an hour than it was five years ago

By Matt Phillips @MatthewPhillips

November 22, 2013

screen-shot-2013-11-21-at-3-04-55-pm

Maybe it’s all the caffeine. The productivity of Starbucks staff has been surging over the last few years. According to a presentation it made to investors earlier this week, a key number by which the Seattle coffee giant measures productivity—”transactions per labor hour”—is set to end the current fiscal year at 11.7. “If you look back to 2008, you would have seen this [at] eight transactions per labor hour, and we base it on transactions,” said Starbucks executive Clifford Burrows at Morgan Stanley’s Global Consumer & Retail Conference earlier this week. That’s a roughly 46% increase since 2008.Here’s the slide Starbucks used to make its point. (As an aside, you’ll notice it covers only the last three years and does that little trick with the y-axis to make the increase look a lot bigger than it is. If the graph had begun in 2008, it would be much clearer that productivity rose fast at first but has now flattened out. Well, hey, this is a sales tool.)

​For a business like Starbucks, churning out fast transactions is the name of the game because so much business is done during key crunch times. (For instance, during the morning coffee rush. As we’ve written, Chipotle, the Mexican-food chain, has a similar challenge at lunchtime.)

Starbucks, however, is trying to get customers to come into its stores at other times too. That’s why, among other things, it spent $100 million to buy small San Francisco bay-area bakery La Boulange in 2012. “What La Boulange is providing us well beyond the morning pastries and the lunch is a significant platform to go after need states and day parts well into the future,” Starbucks CEO Howard Schultz, told investors on the company’s earnings call last quarter.

A platform to go after “need states” and “day parts”? It’s a bakery, and you’re hoping to pull people in for a snack when they’re hungry. Let’s not complicate things, Howard.

Filed under Macro Trends

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a comment