The coffee giant has been working on a number of initiatives to turn around these weak sales, including offering more cold beverages, which are now 50 percent of its business, and new lunch items to draw people into its cafes in the afternoon.
Starbucks’ blended Frappuccino beverages, which were once a major driver of sales growth for the company, are no longer resonating with customers. In 2015, Frappuccinos were 14 percent of Starbucks revenue. However, year-to-date Frappuccino sales are down 3 percent and now account for only 11 percent of the company’s revenue.
The company is now throwing more support behind its refreshment category which includes Teavana branded iced teas and “Refreshers,” a line of fruity, lightly caffeinated drinks.
This category has grown to 12 percent of Starbucks’ revenue in the year-to-date period, up from 11 percent in 2015. Since January, sales are up 14 percent from the same period a year ago.
In addition, Starbucks has been working to grow the number of people who use its loyalty program and mobile app. In the last quarter, these customers accounted for 39 percent of sales at company-owned stores in the U.S., according to Starbucks.
“The number one thing to unlock comp growth in the U.S. is expanding the number of digital relationships we have,” Johnson said during the presentation Tuesday.
Since April, Starbucks has added 5 million new digital customers and 2 million active Starbucks Rewards members, up 13 percent from a year ago.
Johnson became CEO April 2017, succeeding Howard Schultz, who shifted his focus to the company’s Roastery and Reserve Bars and took the title of executive chairman. Earlier this month, Schultz said he would be stepping away from the company completely, effective June 26.
Since taking over as CEO, Johnson has labored in Schultz’s shadow. Despite leaving the top post more than a year ago, Schultz is still considered the face of the brand and often mistakenly referred to as CEO. As he plans his exit, some investors expect there will be a void after he is gone.
Tune in: Starbucks President and CEO Kevin Johnson will be on “Squawk on the Street” at 9 a.m. ET Wednesday.