In an effort to drive sales, Starbucks Corporation (NASDAQ:SBUX) has expanded its delivery services in the United States with Uber Eats. The company has started delivery services in San Francisco and will further expand to Boston, Chicago, Los Angeles, New York and Washington, D.C., in the next weeks.
Notably, this latest move followed the success in Miami, which started in the fall of 2018. This apart, digital initiatives like mobile order/pay, delivery services and third-party loyalty partnerships should stimulate the company’s robust sales trends in the Americas segment.
In the fourth-quarter fiscal 2018, company’s largest market, the United States, reported comps growth of 4%, which marks the strongest gain in the past five quarters. Also, the company witnessed solid new store contributions, wherein new non-comp stores contributed 4% to revenue growth.
Digitalization & Innovations to Drive Growth
The company has also stared online delivery services in China, Japan, India, Hong Kong, Singapore, Indonesia, Vietnam, Mexico, Colombia and Chile. These efforts are aimed at capitalizing on robust online food delivery market. Per eServices Report, global online food delivery is $95 billion market and is likely to grow by 11% annually through 2023.
In 2018, Starbucks announced a historic partnership with and Alibaba (NYSE:BABA) in order to provide seamless Starbucks Experience. Starbucks began delivery services in Beijing and Shanghai via Alibaba's Ele.me platform.
Moving ahead. this Zacks Rank #3 (Hold) company’s operating fundamentals such as solid global footprint, successful innovations, best-in-class loyalty program, digital offerings and product innovations will continue to drive growth.
Meanwhile, the company is strengthening its product portfolio with significant innovation around beverages, refreshment, health and wellness, tea and core food offerings. Evidently, beverage innovations have been a significant contributor to comps growth for Starbucks over the years. Apart from the numerous beverage innovations, Starbucks’ efforts to offer more nutritional and healthy products to its customers are commendable.
In the past six months, shares of Starbucks have surged 30.3% compared with the industry’s 14.8% growth.
Key Picks
Better-ranked stocks in the same space include Wingstop Inc. (NASDAQ:WING) , Darden Restaurants, Inc. (NYSE:DRI) and The Habit Restaurants, Inc. (NASDAQ:HABT) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wingstop earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 12.8%.
Darden Restaurants’ long-term earnings is expected to grow by 10%.
Habit Restaurants long-term earnings is anticipated to grow by 20%.
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Starbucks Corporation (SBUX): Free Stock Analysis Report
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