Source: Fortune
Summary
Starbucks reported 7.1% quarterly sales growth in the US, exceeding Wall Street’s expectations. The company credits increased staffing and enhanced employee benefits for the turnaround. Comparable sales rose 6.1% companywide, with total revenue increasing 9% to $9.5 billion. US store traffic was up 4.4%, indicating the company is winning back customers. Starbucks has invested $500 million in staffing, training, and store upgrades, resulting in improved service and reduced mistakes.
Our Reading
The announcement sounds familiar.
Starbucks’ COO Mike Grams attributes the turnaround to increased staffing and enhanced employee benefits. The company has spent $500 million on measures like adding staff during peak hours and providing bonuses to baristas who meet performance goals. Grams claims that 95% of employees are getting their preferred schedules and 98% of available shifts are filled. The extra staffing has led to improved service and reduced mistakes. The company’s focus on staffing is reminiscent of similar moves by Walmart and Target a decade ago.
Starbucks’ investments have pinched profits in recent quarters, but this last quarter saw profit and sales rise simultaneously for the first time in two years. Shares are up, easing Wall Street’s nerves.
The strategy enters a familiar phase: investing in employees to improve customer service and drive sales growth.
Author: Evan Null
