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Sensor Tower · Abraham Yousef · November 2024
New CEO Aims To Get Starbucks Percolating Again
Starbucks has struggled to drive topline growth in recent quarters, as customers focus on perceived value amidst an uncertain economic environment and newer rivals, such as Dutch Bros, take share. Sensor Tower estimates suggest weakness in Starbucks’s mobile app across downloads, usage and engagement, although the company remains the largest advertiser amongst its peers. Significant change may be needed to turnaround the company, with efforts already underway by new CEO Brian Niccol.
Key Takeaways:
Over the last five quarters, Starbucks’s US download and MAU growth has fallen below that of its peer group, highlighting the competitive nature of the category and the company’s loss of market share. Starbucks’s download growth decelerated to -18% YoY in FY 4Q24, while MAUs fell 3% YoY, compared to an increase of 3% and 2% YoY, respectively, for the US coffee chain cohort (ex-Starbucks)
Within the cohort, Starbucks’s share of MAUs has fallen over 13ppts to just over 50% in FY 2024 from FY 2020, driven by the strength of competitors Dunkin Donuts, Dutch Bros and Tim Horton
The US coffee cohort has increasingly grown its US ad spend on Meta Platforms, with both Facebook and Instagram seeing share gains since each quarter beginning in FY 2Q23. In FY 4Q24, Facebook and Instagram share of spend rose 12ppts and 4ppts, respectively, per ST data, followed by Pinterest (5ppts)
However, promotions and deals may not be enough. Starbucks’s YTD 2024 (CY 1Q-3Q24) spend rose 71% YoY, yet there has been no noticeable pickup in its engagement metrics
Per ST data, both session count and average time spent in the US fell on Starbucks’s app, with both metrics falling 5% YoY in FY 4Q24, an acceleration from the previous quarters
Starbucks’s ability to right the ship will take time and it's likely that there will be limited improvement in FY 1Q25. Per ST data, FY 1Q25 QTD US MAUs (through 11/10/24) are down 7% YoY, while global MAU are down 4% YoY. This suggests that revenue in the quarter will continue its downward trajectory, unless there is a pickup in traffic and engagement over the holidays, potentially driven by any new initiatives
For more information, request the full report from reports@sensortower.com.
