Starbucks today announced record-breaking Q3 FY21 earnings results, fueled by the continued strength of the Starbucks brand around the world. As customer mobility increases, the company is at the beginning of what it has deemed “The Great Human Reconnection,” which is translating to increases in demand for Starbucks as people are again on-the-go, reconnecting and socializing with one another.

“Starbucks delivered record performance in the third quarter, demonstrating powerful momentum beyond recovery. Our ability to move with speed and agility and to be out in front of shifting customer behaviors has helped further differentiate Starbucks, positioning us well for this moment,” said Kevin Johnson, president and ceo. 

“As the Great Human Reconnection continues to unfold, our partners are rising to the occasion, ready to meet our customers wherever they need us to be – with the right store, in the right place, at the right time. Given the strength of our diverse portfolio and the elevated Starbucks Experience, as evidenced in our Q3 record results, we are raising our full-year financial outlook and are confident in our ability to continue to execute our ‘Growth at Scale’ agenda to unlock the full potential of the Starbucks brand,” concluded Johnson.

Full details on Starbucks financial results can be found here.

Key Takeaways

Starbucks ‘Growth at Scale’ Agenda Drives Record-Breaking Results

The impressive momentum Starbucks saw in Q2 , accelerated through Q3, which delivered record revenue of $7.5 billion, up 78% year-on-year driven by strong performance in the U.S., significant net new store growth in China, and continued share gains in the at-home coffee market.  

In the U.S., the company’s disciplined focus on delivering beverage innovation, elevating the customer experience and creating digital relationships with customers drove year-on-year revenue growth of 90% and two-year revenue growth of 16%. Comparable same store sales grew 83%, and importantly, two-year comp grew 10%, despite mobility restrictions still impacting some U.S. geographies and industry-wide pressure in pockets of the supply chain.

Starbucks China reported positive results with year-on-year revenue growth of 45% while total revenue in China has grown by 23% in just two years. The company posted 19% same store comp growth in Q3 and reported sequential improvement on every key metric on a two-year basis, including total revenue growth, store traffic recovery and margin expansion. Starbucks China ended the quarter with 5,135 stores and is well on track to operate over 6,000 stores by the end of fiscal year 2022.

Strong Demand for Cold Coffee Fuels Starbucks Results

Starbucks continues to see strong demand for Starbucks Cold Brew, Nitro Cold Brew, and Starbucks Refreshers beverages. Iced Shaken Espresso alone contributed more than a third of the U.S. iced espresso growth in the quarter. The cold category represented 74% of U.S. beverage sales in Q3, growing 10 percentage points over the last two years.

Additionally, alternative dairy offerings now represent nearly 25% of milk related beverage sales in the U.S. These products in cold and alternative dairy are particularly attractive to Millennial and Gen Z customers and are aligned with the company’s focus on the well-being of people and the planet.

Shifting Customer Behaviors Extend the Starbucks Experience

As consumer behaviors continue to evolve, the company continues to extend the Starbucks Experience through digital customer relationships and relevant store formats.

In the U.S., the Starbucks Rewards loyalty program grew to more than 24 million active members*, representing 51% of all spend in U.S. company-operated stores and up 8 percentage points over pre-pandemic levels. More and more, customers are embracing experiences that effortlessly fit their lifestyle, as evidenced at U.S. company-operated stores where drive-thru represented 47% of transactions and mobile ordering for in-store pickup, delivery or curbside at 26% of transactions.

In China, Starbucks is expanding digital customer relationships and engagement by creating new occasions and experiences to make mobile ordering even more convenient and personalized. This has resonated strongly with customers in China, propelling mobile ordering to 34% of sales, more than double pre-COVID levels. Starbucks Rewards continues to expand, driving 90-day active members to an all-time high of 17 million, a 4% increase over the previous quarter and a 71% increase versus prior year.

Company Expands Reach and Leadership Position in At Home Coffee

In Q3, Starbucks retained its #1 brand position in total U.S. at-home coffee, further expanding its leadership position.

The Global Coffee Alliance with Nestlé continues to see strong performance across all aspects of the key strategic relationship. The Starbucks by Nespresso on the Vertuo line, introduced earlier this year, is already exceeding 6-month distribution and velocity targets, building on the success of the Starbucks by Nespresso platform.

In the Ready-to-Drink category, Starbucks is the #1 premium brand globally, with the North American Coffee Partnership with PepsiCo growing 19% in consumption, and the international Ready-to-Drink business growing double-digits in EMEA and China Asia Pacific. 

These channels amplify the Starbucks brand in more than 80 markets around the globe, offering millions of consumers at-home and at-work options that complement their Starbucks in-store experience. Just yesterday, the company announced plans to reach new markets and grow its Starbucks Ready-to-Drink portfolio with Nestlé, who will now serve markets across Southeast Asia and Latin America.

50 Years Later, Starbucks Future is Bright

As the company celebrates its 50th Anniversary, Starbucks remains as confident as ever in its strategy and believes this quarter represents the beginning of a multi-year tailwind, powered by:

• A large and rapidly growing addressable market for coffee, expected to grow well over $400 billion in size globally over the next three years
• Shifting consumer preferences to premium Arabica coffee, where Starbucks is the leader
• A highly differentiated Starbucks Experience, focused on the customer experience, relevant new beverage platforms, and expanded digital customer relationships, translating to increased consumer preference and deeper customer engagement.

The combination of what’s ahead, reinforced by the company’s strong Q3 results provides Starbucks with confidence that this is just the beginning of what is about to unfold.