Starbucks’ Sales Growth Feeding Off ‘Secret Menu’

May 5, 2014 8:07am

 

AP starbucks tk 140505 16x9 608 Starbucks Sales Growth Feeding Off Secret Menu

                                 (Photo Credit: Ted S. Warren/AP Photo)

Morning Money Memo:

Starbucks’ use of a “secret menu” to create buzz among young consumers is working. While McDonald’s and Dunkin’ Brands – its leading competitors in the quick-serve industry – struggle with flat sales, Starbucks continues to innovate and prosper.

Sales at restaurants open for at least a year rose 6 percent in the second quarter, compared with 2013. That’s the 17th straight quarter of more than 5 percent same-store annual growth.

“Secret menu” items are spread through word-of-mouth, websites and social media. Cookie Dough Frappuccino and Vanilla and Chocolate Chip Ice Cream Frappuccino are among the current favorites aimed at young taste buds. There is usually no mention of these items on in-store menu boards.

Consumers who walk in have to know what to ask for. That increases their “cool factor” and brings in more kids.

Starbucks has also increased the size of its food menu in recent months, introduced more Fizzio carbonated beverages and experimented with evening beer and wine sales at a growing number of restaurants.

Praise for the woman who may have the toughest job in corporate America: Investor Warren Buffett says General Motors’ new CEO would do a great job running any business, and she is the best person to handle the company’s recall problems.

Buffet’s Berkshire Hathaway owns 40 million shares of General Motors stock. Barra became GM’s top executive and the first woman to lead a major automaker in January. That’s when a deadly ignition-switch problem began to surface. GM has recalled 2.6 million cars and admitted knowing about the problem for more than a decade. Barra says she learned of it in December.

The Labor Department’s monthly employment report sounded positive at first glance with U.S. businesses adding 288,000 jobs in April, but average wages were flat last month and more than 800,000 fewer people were in the workforce.

“Many employers dipped their toe in the water with temporary hires, not really ready to make a full commitment to full-time hiring until the economy is stronger,” economist Diane Swonk of Mesirow Financial in Chicago says.

The U.S. Energy Department releases its gasoline price survey later today. This could be the last report for a while to show increased costs for motorists.

Industry analysts expect gas prices to start dropping as early as this week because of rising U.S. production and higher-than-expected crude output in Libya. The annual switchover at refineries to the summer gas formula is almost over. That will also boost supplies

The European Union’s executive arm says the 28-nation bloc’s economic recovery is firmly underway and will help bring down high unemployment faster than previously expected. The E.U. Commission said today it now expects the unemployment rate across the 18 nations using the euro currency to drop to 11.8 percent this year.

Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesnow

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