Starbucks gets its buzz back as City sales soar

Rise in popularity in US copied in UK, where City outlets help revenues jump 5 per cent

The rehabilitation of the US coffee chain Starbucks gathered pace yesterday when it disclosed forecast-beating profits for the past three months. The company said that cost cutting and a spike in popularity in America had helped it to a better-than-expected profit of $217m (£141m) for the quarter ending 28 March, compared with just $25m in the same period last year.

The figures were boosted by an increase in customer numbers, the first rise for 13 quarters. Revenues jumped 9 per cent to $2.53bn, up from $2.33bn a year ago.

"Starbucks' second-quarter results demonstrate the impact of innovation and the success of our efforts to dramatically transform our business over the last two years," Howard Schultz, the founder of Starbucks who returned as chief executive in 2008, said.

The results demonstrate a remarkable turnaround for the group, which as recently as two years ago was struggling after overly ambitious expansion plans misfired.

Speaking in London three months ago, as Starbucks reported its then best results for two years, Mr Schultz said: "We have now come through what was a cataclysmic and brutal economic crisis to deliver a record quarter. From our point of view, continued innovation, the successful enhancement of the consumer experience and a transformed, more-efficient cost structure have brought Starbucks to a significant milestone – a return to profitable growth."

Part of the improvement has come as a result of the ubiquitous chain shedding thousands of jobs and closing hundreds of underperforming coffee shops.

Starbucks has also enjoyed a strong second-quarter performance in the UK, saying that revenues in Britain and Ireland were up by 5 per cent on the same period last year. The group said that it had seen particularly good trading in its City and Canary Wharf outlets in London, underscoring the theory that a recovery in the financial services jobs market is well under way.

"At the start of the recession these branches were hard hit, but they have come back strongly – they are now part of the strongest region of the UK," said Darcy Wilson-Rymer, the managing director of Starbucks UK.

A spokesman said that the group would open 50 new shops in the UK this year, although the overall number will remain broadly flat after the group lost 35 outlets when the Borders chain of bookshops closed last year.

During the past three months, the company has launched its range of Via instant coffee in the UK, which it is selling throughout its coffee shops and other outlets. Mr Wilson-Rymer said that the company has also signed a deal with Thomas Cook airlines to provide Via on its flights. The UK arm of the business already had an agreement with Welcome Break to supply Starbucks coffee at motorway service stations.

"Customers are still looking for value, and they told us that they wanted to be rewarded for loyalty," said Mr Wilson-Rymer. "Our response is now paying off. Customers are also looking for better coffee at home, at work or on holiday, which is why Starbucks Via represents such a big opportunity."

This is not the first time the group has made an assertion about the quality of the Via range.

In January the group was forced to withdraw a claim that the Food Standards Agency (FSA) had barred Starbucks from describing Via as instant coffee because, Starbucks said, the quality of the coffee was too high. The claim was made repeatedly during a meeting with reporters that was chaired by Mr Schultz.

The FSA said that it had given no such advice, adding that "we have not spoken to Starbucks at all about this product". A press officer for Starbucks later admitted that the claim was false.

"There is actually no issue with the FSA regarding Via, or its quality," he said.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee
World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

Max Brooks honours Harlem Hellfighters

The author talks about race, legacy and his Will Smith film option to Tim Walker
Why the league system no longer measures up

League system no longer measures up

Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
Valentine's Day cards: 5 best online card shops

Don't leave it to the petrol station: The best online card shops for Valentine's Day

Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste