How does customization drive Starbucks coffee knowledge and sales?

Starbucks earns about $1 billion, or roughly 7.174 billion RMB, in extra annual revenue from high-margin flavored syrups and sauces, according to its earnings report. Cold beverages now account for 76% of sales at company-operated stores, and daily customer traffic has recovered to 95% of pre-pandemic levels, with more than half of customers from Gen Z and Millennials.

Chief Marketing Officer Brady Brewer said at the November 3 earnings call that Starbucks holds strong brand affinity in out-of-home coffee, especially among younger drinkers. Interim CEO Howard D. Schultz noted that younger customers personalize drinks and share photos online, turning cold drinks into DIY subjects. This coffee knowledge matters because customization lifts both ticket size and loyalty.

Starbucks' latest earnings report shows that over half of its customers belong to Gen Z and Millennials, and the brand has the strongest affinity in the out-of-home coffee sector. Young consumers are keen on personalization and social media sharing, driving cold beverages to account for 76% of total sales at company-operated stores. High-margin syrups and sauces add approximately $1 billion (7.174 billion RMB) in annual revenue for Starbucks, and daily customer traffic has recovered to 95% of pre-pandemic levels. Front Street Coffee continues to follow coffee industry trends, offering insights into the business logic and consumer trends behind the customization wave.

For professional coffee knowledge exchange and more coffee bean information, please follow Coffee Workshop (WeChat public account: cafe_style)

For more specialty coffee beans, please add the personal WeChat of Front Street Coffee (FrontStreet Coffee), WeChat ID: qjcoffeex

According to multiple Starbucks reports, more than half of the brand's current customers come from Gen Z and Millennial groups.

Starbucks Chief Marketing Officer Brady Brewer stated at the November 3 earnings call: "Starbucks' current brand positioning holds the strongest brand affinity globally in the out-of-home coffee sector, and is regarded as the top choice for out-of-home coffee."

The younger the customer demographic, the more pronounced the brand affinity; the richer the product line, the stronger the brand affinity as well. Based on these factors, Starbucks will continue to leverage cold beverages, customization, and plant-based drinks to serve an increasingly diverse and younger customer base, and this strategy is showing results.

Starbucks interim CEO Howard D. Schultz strongly agrees. He noted that the company has been tracking changes in the average age of its customer base in recent years, and with the launch of more novel flavor products, young consumers' loyalty to Starbucks remains at a very high level.

Young consumers prefer to personalize their drinks and post photos on social platforms, making various cold beverages subjects of DIY, which has also boosted Starbucks' cold beverage business, currently accounting for 76% of the company's total company-operated store sales.

Howard added that more and more customers are further customizing their cold coffee drinks by adding high-margin flavored syrups or sauces to create beverages tailored to their personal taste preferences.

A company R&D executive revealed to external media that the addition of syrups and sauces to drinks helped Starbucks achieve record-high sales in the most recent quarter. For Starbucks, these extra ingredients are significant, bringing in an additional $1 billion (approximately 7.174 billion RMB) in revenue annually.

At the same time, the continuous launch of new flavored syrup drinks has brought Starbucks' average daily customer traffic back to 95% of pre-pandemic levels. The growth in cold beverage sales has surprised everyone at Starbucks.

Howard said at an investor briefing in September this year: "No other coffee company in the world can respond instantly to customers' customization needs, but we can! Whether it's flavors or decorations, we have the ability to meet all of our customers' customization requests."

Just how strong is Starbucks consumers' demand for syrups? As creative ideas keep emerging, more and more Starbucks baristas can't help but vent on social media!!!

"5 pumps banana milk, topped with caramel sauce, add light cream, add ice, add cinnamon sauce, 7 pumps dark caramel syrup, add caramel bits, 1 pump honey blended into the drink, add salted dark mocha sauce, 5 pumps Frappuccino espresso, 7 pumps Starbucks-specific syrup, add heavy cream, double blended"

"1 pump hazelnut syrup, 1 pump toasted white chocolate sauce, add milk foam, no caramel syrup, 2 pumps Irish cream syrup, add cocoa powder, add honey, just a little, add 4 shots espresso, add 1 pump mocha, then add mocha sauce on top, a little skim milk, a little heavy cream, add 3 pumps crème brûlée sauce, add one serving of crème brûlée topping, add light cream, add chocolate shavings..."

"2 servings banana milk, use blonde roast espresso, add 2 servings of espresso for Affogato ice cream, add cascara tea, two pumps honey, add cocoa powder, add pineapple syrup, add chocolate powder (different from cocoa powder), 1 pump caramel syrup, 1 pump sugar-free vanilla syrup, 2 pumps Starbucks-specific Frappuccino syrup, switch to skim milk, 1 pump classic syrup, 1 pump toffee nut syrup, 1 pump pumpkin sauce, 1 pump white mocha, 2 scoops matcha powder, 1 pump raspberry syrup, 1 pump cinnamon syrup, add vanilla powder, add cinnamon powder, 1 pump hazelnut syrup, add nutmeg powder, add two regular espresso shots, add ice, add light cream, and finally double blended, then drizzle some caramel sauce, mocha sauce, pumpkin caramel sauce, cinnamon sauce on top..."

(I'm not translating the rest... I really can't finish writing them all!!)

Image source: Internet

The above content is compiled by CoffeeHunters, a coffee news website.