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Starbucks EMEA returns to profit as convenience drives sales

Starbucks has credited takeaway, delivery and drive thru as key components of the business’ recovery from the pandemic as consumers shift towards convenience. However the combined challenges of Brexit and Covid-19 continue to present challenges in its key UK market

Starbucks says convenience has been a key consumer trend in the EMEA region in 2021 | Photo credit: Starbucks 

Starbucks EMEA has bounced back from the pandemic with the company posting strong full-year results. Total EMEA revenues for its fiscal year ended 3 October 2021 rose 41% to reach $237m.
The Seattle-based coffee chain also reversed a $74m loss in 2020 to post an operating profit of $40.5m. Catering to growing consumer demand for convenience had been a key component of the business’ recovery, Starbucks said, with 23% of its EMEA stores now equipped to handle mobile order and pay.
The Seattle-based coffee chain also highlighted that drive thru was now the best performing store format in the region, with around 870 of its 4,112 EMEA stores now handling delivery.
In the UK, Starbucks’ largest European market, the coffee chain said revenues rose 35% to reach £328m ($432m). Starbucks also posted an operating profit of £16.5m ($22m) for the year compared to a £37.4m ($50m) loss in 2020. At the end of its fiscal year, Starbucks said it operated 1,000 UK stores, of which 297 were company-owned and 703 were run by licensees.
The coffee chain said its diversified business model, which encompasses nimbler stores and more digital ordering options, had all contributed to ‘sharply improved’ trading and enabled it to cater to customer demand for convenience.
Despite the positive results, Starbucks cautioned that the operating environment remained ‘extremely challenging’, with inflation, supply chain disruption and labour shortages all impacting the business.
In the UK, Starbucks said its business had been particularly impacted by a shortage of HGV drivers and skilled labour, notably due to the impact of Brexit and the fall-out of Covid-19.
“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,” said Duncan Moir, President Starbucks EMEA.
“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,” Moir added.
Looking to the future, Starbucks said a continued investment in technology and convenience-led propositions would be key for its long-term growth across EMEA.

Starbucks opened its first store in Europe in the UK in 1998. It has since expanded to operate 4,112 stores across 43 markets in the EMEA region.

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