Pumpkin-spice drinks from Starbucks are very popular in the United States. But no matter how popular the drink is, can it save the coffee chain’s failing finances by itself?
That’s the question some people might have after what’s happened lately. The popular fall-themed drink is back on the chain’s menu for the 21st year as of Thursday. But what’s more important is that Starbucks has a new CEO starting September 9: Brian Niccol. Wall Street sees this as a good sign after the chain’s recent poor performance.
There’s no doubt that the pumpkin-spice latte, or PSL as its fans call it, brings in a lot of money for Starbucks. John Zolidis, president of the financial research company Quo Vadis Capital, told MarketWatch that he thinks the drink’s sales will be between $400 million and $800 million a year, with $500 million being a “safe” guess. In short, it’s a big part of the company’s $36 billion a year in sales.
Starbucks doesn’t give out sales numbers for individual drinks, but a spokesperson for the business said that since the PSL came out, hundreds of millions of them have been sold.
A company representative said that the PSL is their “most popular seasonal beverage of all time.”
In fact, researchers and experts all agree that the PSL is a good way to make money right now. But they also say it’s not likely to become a much bigger seller or make things much better for the company in the future.
These people who follow the business have been saying for a while that the company needs to focus on other things to make its finances better.
An analyst at Edward Jones named Brian P. Yarbrough said, “They need to fix deeper underlying problems.”
Some of the problems that are often brought up are making the stores faster and more efficient at making drinks (wait times have been a problem lately) and getting customers who don’t just go to Starbucks once a day but can be persuaded to go more often with the right goods and deals.
Improving the public’s view of Starbucks is also very important.
In mid-August, Andrew Cowen, an analyst at TD Cowen, said, “We expect Mr. Niccol to help Starbucks better figure out its brand identity and better use marketing to create brand buzz.”
It’s not that Starbucks doesn’t try to get people to notice the PSL. It came back with the drink earlier than ever this year, extending the sales season for a drink that’s supposed to go with the cooler fall days. Of course, Starbucks isn’t the only place doing this; pumpkin-spiced treats have been around since July.
‘There are deeper underlying issues they need to fix.’
Brian P. Yarbrough, an analyst with Edward Jones
Additionally, Starbucks has added the PSL to its fall menu of drinks and foods, and it changes this menu every year. It has added an iced apple crisp non-dairy cream tea to the list of drinks this season.
Niccol is joining the team well into PSL season, so people in the business don’t think he’ll be able to do much more to boost sales of the drink or the fall menu as a whole. That doesn’t mean the business can’t change after 2025, though.
Steve Zagor is a hospitality expert in New York City and a business school professor at Columbia University. He says that the drink could be rethought by adding healthy ingredients and taking advantage of the growing interest in functional foods and drinks.
But Zagor warns that the drink might not be as popular in the future. He knows that some people will always want the standard PSL this time of year. That’s because people who drink coffee these days tend to look for new and stronger tastes.
To put it another way, the PSL might be a little too long. Zagor said, “We’re leaning toward more spicy flavors and drinks that aren’t like anything else.”
