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Originally published October 30, 2013 at 1:29 PM | Page modified October 30, 2013 at 5:03 PM

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Expanded food menu adds bulk to Starbucks profit

The coffee chain used its loyalty program to get customers to visit more often and spend more on revamped sandwiches and other food.


The Associated Press

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Starbucks says its profit increased 34 percent in the quarter, as the coffee chain used its loyalty program to get customers to visit more often and spend more on revamped sandwiches and other food.

The Seattle company said Wednesday that global sales rose 7 percent in its fiscal fourth quarter at cafes open at least a year, including an 8 percent rise in both the U.S. and Asia. In the region encompassing Europe, the Mideast and Africa, where Starbucks has struggled, the figure rose 2 percent.

The sales performance is somewhat of a standout in the restaurant industry. Chains including McDonald’s and Burger King have blamed the weak economy as they fight to drive up sales.

But others are faring relatively better, with Chipotle reporting a 6.2 percent sales increase at stores open at least a year and Dunkin’ Donuts seeing a 4.2 percent increase for the latest quarter.

Starbucks has managed to keep growing through a mix of measures. It’s adding items such as Evolution juices, which can cost as much as $6 a bottle, and has rolled out new sandwiches and salads to get people to spend more.

Prices on several beverages were also hiked over the summer.

Chief Financial Officer Troy Alstead said the increase in the average receipt for the quarter was mostly because of food. “As they’re adding those purchases; that’s giving us a lift,” he said.

Still, Alstead said only about a third of purchases overall include food. But he said the trends are improving, and should continue to do so as the company finishes the rollout of new La Boulange baked goods.

For the quarter, Starbucks said it earned $481.1 million, or 63 cents a share. Analysts expected 59 cents a share.

A year ago, the company earned $359 million, or 46 cents a share.

Revenue rose to $3.8 billion, but was short of the $3.81 billion analysts expected, and Starbucks stock fell 2 percent to $79.20 in after-hours trading.

Over the past year, the stock is up more than 73 percent.

Starbucks also said Wednesday that it expects revenue growth of “10 percent or greater” for 2014, which Alstead said represented “zero change” in the company’s expectations.

In the previous quarter, Starbucks had specified a forecast of 10 to 13 percent growth.

The company also raised its dividend by 24 percent to 26 cents per share.

Starbucks has about 20,000 locations around the world, with about 12,000 of those in the U.S.



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