Starbucks UK | Financial Year 2021

Total revenues up 35 percent

Starbucks UK now operates with three delivery aggregators, including Just Eat and Deliveroo which were onboarded in the year.
Starbucks UK now operates with three delivery aggregators, including Just Eat and Deliveroo which were onboarded in the year.

Starbucks' UK has swung back into profit. The company today announced its figures for the financial year ending 3 October 2021. Total revenues 2021 rose by 35% to £328m as sales recovered in its company-owned stores and franchised sites. The operating profit was reported at £16.5m, up from loss of £37.4m.

Sales growth has been driven by an increase in cold beverages, a higher rate of food sales and a limited number of price increases. In addition, the average customer spends more when buying through delivery or Drive Thru than they do in a traditional store.

In a release Starbucks explains: "On March 20, 2021, as restrictions eased, we saw strong demand for our products as we moved back to our standard operating model. There was particularly strong footfall recovery in suburban locations and our stores in retail parks. Drive Thru and delivery have performed well. Our office, travel and inner-city locations have all been much slower to recover, however."

During the pandemic, Starbucks UK Coffee received a £25m loan from its parent company Starbucks Corporation to help offset the impact of reduced trading. This loan was paid off during the course of the year and the company is now debt free.

the strong recovery, the financial performance of company operated stores has not yet recovered to pre-pandemic levels, the company states. "The UK market continues to experience a shift in consumer demand and sentiment. Footfall has not recovered in traditional high streets, with consumers increasingly making retail purchases online. Behavioural changes that developed during the pandemic are persisting, with working from home and hybrid working evidently now a normal pattern of life for many of Starbucks' customers."

Growing channels on the other hand are Drive Thru, on-the-go formats and delivery platforms. By the end of the reporting period, a total of 611 stores were on delivery platforms, across various cities in the UK. Starbucks UK now operates with three delivery aggregators, including Just Eat and Deliveroo which were onboarded in the year.

"In common with our competitors, our UK business has been impacted by shortages of HGV drivers, packaging material shortages, rising supplier costs and shipping delays. Both Starbucks and its suppliers have experienced a shortage of available labor since the reopening of the economy caused by the combined impact of Brexit and the pandemic on labor supply," it says in the release.

The UK is the largest market for Starbucks in EMEA. At the year end, Starbucks had a total of 1,000 stores in the UK, of which 297 were company-owned and 703 were run by licensees. Despite the impact of COVID-19, Starbucks opened 14 new company-operated stores during FY21, while 5 stores were permanently closed. New store openings were targeted in key drive-thru locations with high traffic counts. In total, Starbucks now has 242 Drive Thru stores at the end of FY21.

Recovery in EMEA

The company has also announced its results for its Europe, Middle East and Africa (EMEA) business, which is based in London and comprises 3,900 stores in 43 markets but excludes the UK operations. Improving revenues (USD237m, + 41%) pushed the division from a loss of USD74m to an operating profit of USD40.5m.

Duncan Moir, President Starbucks Europe, Middle East and Africa, commented: "We have had a difficult operating environment with the first half of the year continuing to be impacted by COVID-19 restrictions. However, our trading position improved as restrictions were eased and we have since experienced a sharp bounce-back in trading.

"The pandemic accelerated customer trends towards convenience and we are continuing to see strong demand in Drive Thru, on-the-go formats and delivery platforms. Our investment in technology has been key in making sure we are well placed for these changing dynamics and we have also adapted our operating model to ensure that we can be more flexible and agile. We're optimistic that these actions position Starbucks for long term growth both in the UK and EMEA."

About Starbucks Coffee Company
Founded in 1971, Starbucks Coffee Company now has more than 33,000 stores around the globe. Starbucks' EMEA headquarters has been in the UK since 2015, serving the Europe, Middle East and Africa and driving Starbucks growth strategy in the region. Starbucks opened its first stores in Europe in 1998 and has since grown to 4,112 stores across 43 markets, with the UK remaining as the largest market.