Starbucks CEO Rubbishes Recession Talks, says “We’re Firing on All Cylinders”

Starbucks CEO Rubbishes Recession Talks, says “We’re Firing on All Cylinders”

While some analysts are busy signaling a 2008-like financial crisis in the US, the CEO of Starbucks suggests otherwise. In an interview on CNBC with Jim Kramer, Kevin Johnson said that he doesn’t see any signs of a recession in the US.

What does Johnson believe?

In an interview with Kramer, the Starbucks head honcho said,

“We have not seen signs in the U.S. of anything related to a slowdown, but we do know these things go in cycles, but right now we’re firing on all cylinders and [the] consumer seems to be doing well.”

Starbucks CEO Rubbishes Recession Talks, says “We’re Firing on All Cylinders”

His comments are in striking contrast with market fears that a recession could be just around the corner. However, Johnson’s confidence in the economy may come from the fact that the company’s investments in digital customer relationships are finally paying off.

Its loyalty program is now responsible for 42% of sales, and their app has over 17 million users. Its revenue also increased by 8% year-on-year last quarter to $6.8 billion. Interestingly, the US-China trade war hasn’t affected the coffee-crazy customers of the company. Its same-store sales were up by 7% in the US and 6% in China.

What has been the key to Starbucks’ recent successes?

According to Johnson, a digital customer experience alongside the introduction of new cold beverages has helped them stay afloat. Now the company easily automates staff schedules. He said that the coffee chain is moving on the path of innovation. One such innovative menu item- the pumpkin cream cold brew, is set to debut on their fall menu this Tuesday.

Cold beverages help the company keep selling in hotter hours post-noon when the initial kick of a hot cup of morning joe washes off. Millennials are loving the shift to cold brews, and the company expects to serve its nitro cold brews, unique brews made sweeter and creamier using nitrogen, by the end of September in all its stores. Johnson said that cold brews now account for over half of their drinks.

Johnson joined Starbucks in 2017 but followed in the footsteps of his predecessor Howard Schultz by looking for a purpose for his business that goes beyond the profit motive. He signed the Business Roundtable pact with 200 other CEOs which means that the company is “going to invest and take care of our partners, whether it’s health care, college achievement.” The company has hired 25,000 veterans or military spouses already and plans to hire 5,000 veterans each year.

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Viraj loves to write and express his views on anything related to Finance, Crypto, or Fintech. He has been covering Finance & Crypto for more than five years now. He likes Tesla. He also writes on Healthcare, and Technology among other stuff.

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