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Friday, October 31, 2014

Are Starbucks Customers Over the Pumpkin Spice Latte?

7:27 PM
After an autumn in which companies seemed to inject pumpkin spice flavoring into just about every conceivable baked good and beverage on the market, there are creeping signs that America has finally had enough. The evidence? Starbucks' recent earnings report.
Starbucks and @TheRealPSL Twitter account set many a pumpkin spice lover heart aflutter in late August when they hinted that Starbucks' signature pumpkin spice latte was rolling out a few weeks early for its 11th season. The unspoken subtext of this decision was that not only would an early release of the pumpkin spice latte please fans—it would also help sales.
That's why it was surprising to see Starbucks this week report sluggish growth in traffic and sales. In its fourth-quarter earnings on Thursday, Starbucks said its same-store sales globally and in the Americas grew only 5 percent over the last three months while traffic barely budged, with an increase of 1 percent.
"We are not satisfied with 1 percent traffic growth in the Americas and are taking immediate steps to grow traffic," Starbucks Chief Operating Officer Troy Alstead told investors. He noted that the company has been gaining more midday customers from about 11 a.m. to 3 p.m. John Culver, Starbucks' group president for channel development and emerging brands, added that the traffic slowdown was part of a "macro shift" in people shopping less at brick-and-mortar stores and more online through mobile devices.

At the same time, this is a shift that's been underway for a while, and aside from a perfunctory mention that the pumpkin spice latte "did very well for the season," discussion of it was largely absent from the earnings call. Compare that with the call from the same quarter in 2013, when Alstead pointed out that the "pumpkin spice platform" had "once again delivered strong growth." That year, Starbucks reported comparable sales growth of 8 percent driven by a 5 percent boost in traffic.
s it possible that the pumpkin spice latte is losing its charm? It's hard to say since Starbucks hasn't released specifics on the sales of that particular beverage. But it seems that the drink Starbucks so successfully branded as fall just isn't working its magic the way it used to. Maybe they really will need to have that talk.

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