Starbucks will spotlight afternoons to win more loyalty members
- Starbucks is launching a campaign that will run through August focused on attracting new customers in the afternoons, the company announced in its Q2 2018 earnings report. Same-store sales at the restaurant chain were up 2% in the Americas for the second quarter ending April 1. While customer traffic was flat, increased spending per visit led to the sales growth.
- About half of Starbucks' volume sold in the afternoon is to consumers who are not members of the brand's My Starbucks Rewards program and aren't as aware of Starbucks' products as members. The afternoon-focused campaign will highlight a lineup of new beverages, including a Frappuccino to be announced this week. The company has also been rethinking its Frappuccino Happy Hour, which initially helped lift sales, but has not been profitable the past two years.
- Starbucks additionally plans to decrease its limited-time offerings by 30%. The company will focus its marketing on strengthening customer relationships with targeted offers and leveraging products with broader appeal. For example, its Blonde Espresso, intended to only have a six-week marketing push, has been successful enough that the company is planning to continue marketing it through the year, which could serve as an example for other beverages.
Starbucks' mobile rewards program has become an increasingly important sales driver at the chain, so it's not surprising the brand is ramping up focus to grow awareness for the offering, particularly among a bulk of afternoon customers who haven't signed up for it. Putting a spotlight on the afternoons might additionally help Starbucks distinguish its marketing from other coffee houses that are geared heavily toward morning drinkers. Peeling back on limited-time menu items by 30% is also interesting, as previous products — especially a Unicorn Frappucino released last year — have been successful. The news suggests that attempts to iterate on the Unicorn idea have proven less buzzworthy.
Starbucks must continue to evolve its digital marketing to stay competitive with its main rival, Dunkin' Donuts, which is in the midst of a considerable transformation that includes new technology-focused store concepts, revamped mobile offerings and even dropping the "Donuts" portion of the brand name to better align with more popular offerings like coffee. Dunkin', which reported its Q1 earnings last week, is also planning to increase the visibility for mobile ordering, especially through its DD Perks loyalty program, which grew 33% to 8 million members in 2017.
Beyond the changes to its marketing, Starbucks executives addressed some controversy the brand has recently weathered on a call discussing the earnings, including a viral video that showed two black men at a Philadelphia location being arrested for trespassing after only asking to use the store's bathroom and claiming they were waiting for a friend to arrive. Despite protests and calls for boycotts, CEO Kevin Johnson said that the incident didn't affect April sales, CNBC reported. Starbucks plans to close all of its U.S. locations on May 29 for a seminar on racial bias, which will likely cost the company millions.