Dive Brief:
- Starbucks' Aug. 25 launch of its seasonal Pumpkin Spice Latte — its earliest ever release — improved foot traffic on the following Saturday and Sunday to 7.7% and 6.2% below equivalent 2019 levels, according to data from Placer.ai. Prior to the return of the fall favorite, Starbucks' peak foot traffic amid the coronavirus pandemic occurred during the week of Aug. 17, when traffic came within 20% of 2019 levels.
- The NPD Group noted in an email to Restaurant Dive that limited-time PSL offers typically don't attract new customers, but rather appeal to existing customers who purchase often — at times three times more frequently than non-buyers. This has been the trend for the past four years, according to NPD's Checkout, which tracks receipts of over 130,000 consumers.
- This data could suggest strong diner demand for a sense of normalcy and comfort amid the COVID-19 crisis. Pumpkin spice-related products seem to be a safe bet to capture this interest — the flavor blend represents a $600 million-plus market, according to Neisen data from 2018, and the PSL is Starbucks' most popular seasonal drink, with more than 424 million sold since 2003.
Dive Insight:
In the past few years, the PSL hasn't always delivered a traffic boost for the coffee giant. Research last fall from location intelligence agency Gravy Analytics found that Starbucks' average daily traffic actually decreased 2% following its 2018 PSL launch, citing potential fatigue of the product as a culprit. But the economic and social upheaval of the coronavirus pandemic could prime the product for a stronger year as diners seek "normal" experiences.
No doubt Starbucks could use a traffic lift this year. NPD Group's data shows that restaurant visits overall were down by 14% in July, and visits to quick-service coffee and donut outlets — many of which offer pumpkin spice lattes — are down 23% and 13%, respectively. Starbucks and Dunkin' may have both been aiming for a traffic reversal when they released their PSL offerings earlier than ever this year. Dunkin's launch came on Aug. 19.
This year's early PSL launch could also be a savvy marketing play as the collective narrative in the U.S. has focused on how much of a challenge this year has been because of the pandemic and other cultural challenges. Pretending to expedite the end of this year has been the focus of other campaigns, including from Popeyes and Burger King, to be a source of humorous levity for consumers.
It's also worth noting that PSLs tend to lift check size, according to NPD, and as such, have proven to be a profitable campaign for Starbucks in the past. This was the case during fiscal Q4 2019 ending Sept. 29, 2019 when its fall line up, which included the Pumpkin Cold Cream Brew, performed extremely well and contributed to an uptick in average ticket for the quarter. The combination of higher traffic and profitability could be the tailwind Starbucks needs for its current fourth quarter. Same-store sales during Q3 2020 for the U.S. were down 40% with transactions down 52%, according to an earnings release reported in July.
Still, a question mark remains as to whether or not this traffic lift will sustain through the entire season.
"Consumers anticipate [PSL] availability and know the drinks are only around for a short period of time and this anticipation creates demand," Darren Seifer, NPD food and beverage analyst, said in a statement. "With foodservice visits down overall, the success of this year's pumpkin spice latte offers remains to be seen."
