The 2020 pandemic hit many companies hard, while other companies took it as a chance to grow, seemingly unaffected by the state of the world around them. NVIDIA (NASDAQ:NVDA) came out as one of those thriving businesses and achieved gains of 122% in 2020. The company’s graphics processing units (GPUs) were present and needed for trends that accelerated exponentially due to the pandemic, boost...
Starbucks (NASDAQ: SBUX) has been one of the companies that took one of the most brutal falls from the pandemic. Since people had to adapt themselves to a stay-at-home lifestyle from the get-go, it was no surprise to find out that Starbucks’s sales were quickly declining in response.
Starbucks hit an all-time low in March 2020 by dropping an astonishing 16% in the stock market.
However, Starbucks has always been (and still is) a company capable of innovating, and so it was capable of making its sales grow once again in due time. Its 2021 numbers alone are showing remarkable improvement over last year’s performance, recovering up to 101% over the initial 2020 values.
As it has managed to thrive in the utmost challenging environment, it is easy to understand why investors are confident about its potential for the near future.
But how did Starbucks make all of this possible? And how can Starbucks take advantage of it once the pandemic is long gone?
A prospering brand overall
Even before we had any knowledge regarding the pandemic, Starbucks was already executing a new and innovative mobile ordering system. Several stores were already being set in place,, which was exclusively dedicated to receiving the clients’ orders digitally and then deliver said orders to the customers who would later come to the physical location.
Regardless of Starbucks’ complications during the pandemic, it was also able to shine some light upon newer opportunities. The company now had a shot at heavy improvement towards this service. Fast-forward a little, and Starbucks now had an enhanced mobile service with a more elaborated rewards program, as well as upgraded order features.
These efforts alone raised the total sales by a solid 8% in a single year.
If that was not enough, Starbucks then took advantage of the situation and went on to install all-new drive thrus in their already established locations. These efforts alone could offset the declining sales from their physical stores.
Something worth mentioning, these newer ventures for Starbucks don’t come for free. To accommodate for all the latest changes, the average ticket per purchase has increased in cost. However, the brand itself is so well-established among its clientele that the very idea of still being able to consume its products is more than enough to bring them back for more, even while under a higher fee.
Even if the latter does not apply to the entirety of its customer base, it does indeed apply to a significant amount, adding even more value to Starbucks’s process of ongoing recovery. While its numbers are still not as high as they usually were, the higher fees per customer balance the company’s numbers just enough.
In short, even when facing adversity, Starbucks is still capable of offering a quality product and a quality service. And that reflects on its capacity to grow in any given situation.
Looking past the pandemic
Despite last year’s notorious setbacks, Starbucks was still able to maintain its well-known growth rate. Starting in last year’s fiscal year and going on until 2021’s first quarter, it even managed to open around 1,600 new stores. For reference, the total amount of stores currently stands around 33,000.
A while ago, the company announced a long-term plan of increasing that number to 55,000 stores in 10 years. Its current performance demonstrates the capacity to reach those numbers by implementing newer forms of commerce.
From a financial standpoint, Starbucks expects to recover from last year’s 14% drop, increasing between 18% and 23% in 2021. It all seems to point towards it being feasible.
For investors, this would also indicate an opportunity for growth in the value of Starbucks stocks. In the best possible scenario, that growth would not only apply to this year but for the next 10 years as well.