Charts: How much people cut from Starbucks visits

A major concern: Fewer customers are placing orders.

Overall, comparable sales were down

Starbucks just posted two consecutive quarters of declines in global comparable sales — a key metric for the restaurant industry that looks at how year-over-year sales have changed at continuously operating company-operated locations. It means that recent store openings and closings are not taken into account.

Starbucks’ global comparable-store sales fell 4% and 3% in the most recent two quarters.

Starbucks last saw a decline in global comparable store sales in late 2020 during the height of COVID.

Starbucks gave numerous reasons for its poor performance. In various markets, some customers have boycotted chain linked to the Middle East conflict, which Narasimhan told investors last month was “driven by widely discussed misperceptions about our brand.”

American consumers visit less often

Comparable store sales are comprised of two measures – number of transactions and average ticket size.

In the past two quarters, the number of Starbucks comparable transactions – that is, the number of orders placed at comparable stores, also known as traffic – has declined in the US compared to the same periods of the previous year. This means that fewer customers place orders at Starbucks stores or visit less frequently.

In some cases, such as during the peak of the pandemic in 2020, the huge drop in comparable transactions was partially offset by a 25% increase in average ticket size, likely because more people were placing delivery orders in group during waves of isolation.

The average ticket size increases due to several factors: people might order more items per transaction, such as purchasing for a group or adding food; they might opt ​​for more expensive items such as drinks with expensive modifications; or Starbucks could have simply raised prices.

The average Starbucks ticket size in the US continues to grow, but in the past two quarters it hasn’t been enough to offset the decline in orders, as the chart below shows.

The US is by far Starbucks’ biggest market. The Seattle-based coffee chain has more than 16,700 stores in the US, or more than 40% of its total stores.

Jefferies restaurant analyst Andy Barish told Business Insider there was a “pretty long list” of reasons for Starbucks’ same-store sales decline, including a drop in casual afternoon shoppers.

Customers are fed up with price hikes, which Edward Jones analyst Brian Yarbrough told BI Starbucks needs to address: “As we all know, Starbucks is not known for value.”

In a July survey by Deutsche Bank, nearly half of respondents who said they stopped going to Starbucks or cut back on their visits said it was because it had “become too expensive.”

Barish pointed out that many Starbucks promotions are only available to app users. Occasional customers, whom the chain says it strives to retain, are less likely to have its app.

“Recognizing the premium position of our brand, we have been measured in our use of the offers,” Narasimhan told investors last month. He said only 14 percent of transactions were driven by offers — 10 percent for star-based Starbucks Rewards offers and 4 percent for price-based offers — compared to an average of 29 percent at competitors.

Plus, its menu might alienate some customers. Recent innovations like lavender drinks, energy drinks and pearls likely haven’t resonated with Starbucks’ core customers, Barish said. However, Starbucks said the boba-inspired popping pearl drinks have sold well.

What is happening in China?

China, the world’s second most populous country, is a huge market for Starbucks. The coffee giant has more than 7,300 stores there, nearly 20 percent of its global locations.

Starbucks’ comparable store sales in China have been incredibly volatile over the past five years.

This was largely due to changes in the number of orders, but the average ticket size has also fallen steadily over the past two years. In the most recent quarter, both the number of comparable transactions and the average ticket size were down 7% year-over-year.

Sales have been massively affected by China’s strict zero-covid policy. But in recent months, they have been hit by cautious consumer spending and increased competition, Narasimhan told investors in July.

Luckin Coffee, its biggest rival in China, has nearly three times as many stores as Starbucks in China after a monumental increase in units. But it’s also struggling with same-store sales down more than 20% in the most recent two quarters.

“China is obviously a tough market, and it’s not just Starbucks,” Yarbrough said.

Starbucks added more than 800 new Chinese stores in the year to June 30. The chain continued to grow in China “hoping for some market shakeout,” but in the short term, “it’s a pretty tough road that I’m going through right now,” Barish told BI.

“They would probably be best served by slowing growth there and waiting out some of the commotion that may or may not occur,” he said.