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Must-know: Starbucks’ key value metrics—same-store sales

Must-know: An overview of Starbucks' 3Q14 (Part 2 of 10)

(Continued from Part 1)

Same-store sales

Across the world, Starbucks (SBUX) reported a same-store sales growth of 6% for its 10,515 company-operated stores that had been open for 13 months or longer. Although the earnings are reported in 2Q14, Starbucks’ fiscal year ends in September. So, these are the company’s third quarter results.

Same-store sales are one of the important drivers in the restaurant industry. Same-store sales directly drives the revenues. It measures the percentage change in the revenues generated by existing restaurant locations over the same period last year.

Segment-wise same-store sales

Starbucks reports same-store sales for its three segments—the Americas, China/Asia Pacific, and Europe, Middle East, and Africa (or EMEA). Looking at the above graph, the company-operated same-store sales have been declining over the years for the China/Asia Pacific segment. However, the worldwide same-store sales have remained above the 5% level in the past 12 months. Below we’ll discuss how each segment has contributed towards the total same-store sales. Yum! Brands (YUM) and McDonald’s (MCD) both have a presence in all of the above stated regions.

Americas

This segment includes the U.S., Canada, and Latin America—including Brazil and Puerto Rico. Together, the Americas accounted for 74% of Starbucks’ revenues in the quarter. Same-store sales increased by 6% compared to 9% in the same quarter last year.

EMEA

The EMEA segment accounted for 7.8% of the revenues for the quarter. Same-store sales increased by 3% compared to a 2% increase in the same quarter last year.

China/Asia Pacific

This segment includes China, Thailand, Singapore, and Australia. The segment accounted for 6.9% of revenues in the quarter. Same-store sales increased by 7% compared to 9% in the same quarter last year.

Same-store sales are one important valuation metric for the restaurant industry. Other valuation metrics include average check and traffic. We’ll discuss these metrics later in this series.

An investor who would like to invest in the restaurant industry as a whole can invest in exchange-traded funds (or ETFs) like the Consumer Discretionary Select Sector SPDR Fund (XLY) and the PowerShares Dynamic Food & Beverage ETF (PBJ).

Continue to Part 3

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