Company Trend Analysis - Starbucks Wants A Bite Out of Lunch - DEC 2017


BMI View: In response to changing consumer preferences for healthier food, Starbucks has unveiled a new health-focused menu, Mercato. The Mercato strategy is part of Starbucks ' wider plans to double its food business by 2021 and diversify its customer base, appealing to consumers for food, not just hot beverages. BMI is sceptical as to whether this new ' healthy food ' offering will attract a new client base, as Starbucks is unable to market the products as freshly made in store.

Starbucks, which has long dominated the coffee business, is expanding its business by offering lunch options. Starbucks has a new, expanded menu called Mercato - Italian for "marketplace" - which offers "fresh and vibrant grab-and-go lunch". Items on the new menu include food choices like avocado salads, sushi burritos, and herbed chicken and fig-spread sandwiches. To appeal to millennials (20-39 years), there is also a "farmers' market protein box" which has Genoa salami, cheddar cheese, snap peas, sliced apples, crackers and almonds. The new Mercato menu was launched in April 2017 in 100 locations in Chicago, and at another 200 of its stores in Seattle in August 2017.

In FY2006 (ending October 1, 2006), Starbuck's food sales accounted for 15% of Starbucks's business, but this has grown to roughly 20% of its business in FY2016 (ending October 2, 2016). Having expanded its food business over the years, Starbucks hopes to double it by 2021. By expanding its food offering, Starbucks is trying to diversify its product portfolio by increasing its number of products. Consumer preferences have shifted towards healthier food options and Starbucks is being proactive by addressing this change through its new menu. The strategy also seeks to expand Starbuck's clientele, and appeal to customers throughout the day. Half of Starbucks customers come in before 11:00am and hence, a focus on its lunch menu is a way to attract footfalls to stores, not just during the peak morning period.

Foodservices To Outperform Grocery
Retail Sub-Sector Spending (%y-o-y)
e/f= BMI estimate/forecast. Source: BMI/National Statistics

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