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Starbucks keeps buzz going with customer loyalty: Estimize

Restaurants have been having a mixed Q3 earnings season thus far, with some like McDonald’s (MCD) easily surpassing expectations and others such as Yum! Brands (YUM) reporting big misses.

This week we’ll see which camp Panera Bread (PNRA) and Starbucks (SBUX) fall in when they release their highly anticipated results.

For Panera, the Estimize community is looking for EPS of $1.33, two cents above the Street, suggesting a YoY (year-over-year) decline of 4%. Revenues of $663.41M are just slightly higher than the Street’s $662.9M. It’s been a rough road for Panera which has missed top and bottom-line estimates in both quarters this year due to higher food costs, labor costs and stiff competition in the fast casual space. Up to this point, expenses have been adding up at Panera 2.0, a series of integrated technologies that include digital ordering and mobile payments, with no real results.

However, improving same store sales in the second quarter, and indications of an even stronger third quarter (SSS growth in the first 27 days of Q3 came in at 4.7%) may be due to improvements in Panera 2.0 initiatives. In the interest of reaching consumers through multiple distribution channels, the company is ramping up its packaged goods offerings, estimated to be a $1B business, by making Panera branded products available to consumers in grocery stores.

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Cult favorite stock, Starbucks, reports Thursday after the bell. The Estimize EPS consensus is one penny above the Street at $0.45. Revenues of $4.921B are ahead of the Street’s estimate for $4.888B. Starbucks is leading the restaurant industry in mobile and is reshaping the way people order and pay. Close to 20% of all transactions are now mobile and customers using the app tend to spend more. Starbucks mobile order and pay app launched this spring in the U.S. and was recently released in Canada and the UK as well. The app allows customers to order and pay ahead of time and is already gaining a lot of traction.

To fill in non-peak hours such as lunch, the coffee company is focusing on higher margin offerings, aka food. Late last year Starbucks said it plans to double its annual revenue from food in the U.S. to more than $4 billion in the next five years. The company acknowledged that the quality of its food didn’t always match the quality of its coffee, so it acquired Bay Bread LLC and its line of La Boulange baked goods in 2012. Starbucks also keeps customers loyal with its very popular rewards program which is important for retaining customers and attracting new ones. Starbucks has 10 million customers signed up for its rewards program.

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