Starbucks's sales perk up as patrons resume luxuries
STARBUCKS, the world's largest coffee chain, said it enjoyed rising sales in Ireland for the first time since mid-2007 as the number of customers grew and they dug into their pockets to buy extras such as cakes and sandwiches.
Sales posted "single-digit growth" in the second quarter of the year, said Darcy Willson-Rymer, the head of Starbucks' operations in the UK and Ireland. He declined to be more specific or to give details of profitability levels.
The figures compare growth with the same stores open last year. Starbucks, which has 20 stores here, closed four stores in early 2009.
The chain has changed the choice of food it offers here to accommodate Irish tastes, offering porridge and crepes for the first time, reducing some prices while also introducing its first loyalty card here and cutting costs among suppliers.
Starbucks, which published company results for its 11,000 plus stores in the second quarter of 2010 yesterday, has seen a return to sales growth in many other countries in recent months as coffee drinkers shake off worries about the economy and allow themselves small luxuries.
"People take stock, find out what the recession means to them and evaluate their spending decisions," said Mr Willson-Rymer. While large spending decisions may continue to be placed on hold, people remain eager to buy a cup of coffee and "escape the headlines", he added, while remaining reluctant to call the end to the present recession in Ireland.
The increase in customers was accompanied by closures of four stores in Dublin as part of a programme to shut 100 coffee shops outside the US.
"Altering the course of the business meant taking some tough decisions, but it was the right thing to do and it's working," Mr Darcy added.
Just as in Ireland, the chain's chief executive Howard Schultz believes the company has broken a historical correlation between downturns in consumer confidence and slowing sales, as cafe patrons were once quick to give up little luxuries like cappuccino when money was tight.
"We have now created separation for the first time," he said, "something that was helped by a wider range of pricing and a renewed focus on quality."