Businesses that sell holiday food products are smart in making good revenue. Having holiday food products help the companies earn good amount of income as the food products are limited. Many people wait all year long until fall to have Starbucks Pumpkin Spice Latte, or McDonalds McRibs or even donuts from Dunkin Donuts. Starbucks changes the design of the cups according to the holiday, which also captures many customers attention. According to Forbes, Starbucks revenue increased by 12% during the holiday season. Also in the last 12 months, Starbucks shares have gone up by 46% and have gone down by 1%, while other businesses have gone by 8%. According to Marketplace, Starbucks has sold about 200 million Pumpkin Spice Latte since 2003. Besides Starbucks, Trader Joe's also sells pumpkin spice food products during the fall. Trader Joe’s sells food items such as pumpkin ice cream, pumpkin ale, pumpkin tea, pumpkin cereal, etc. Trader Joe’s has made a lot of money by selling pumpkin food items. Having holiday food items it beneficial for the store because many people are attracted as the food items are rare or nondurable and only come around in November. According to the Christian Science Monitor, McDonald’s net income has increased from $1.22 billion a year to $1.24 billion a year because of the McRib, and the Caramel Mocha drink. The company headquarters saw the revenue increase by 4%. For McRibs from McDonalds, the shares are up to 40% this year according to CNN Money. As you can see in the graph below that Starbucks gets most of its revenue from the beverages. Also you can see in the graph, the revenue for starbucks has increased over 8 years.
The demand for Starbucks has also increased over the years. Many people are addicted to coffee that they have to go to Starbucks in the morning for there coffee. According to Seeking Alpha, Starbucks has increased the prices for their drinks, but consumers have been the same. If any other food company raised their prices for holiday specials then the demand would still be the same. According to BBC News, Starbucks income has increased 16% this year from last year. According to CFO, Dunkin Donuts revenue increased 5.8% during the holidays. As you can see in the graph below Dunkin Donuts revenue has increased over the past years because of the
holiday donut flavors. All of this shows that having holiday flavors of drinks and food items helps the companies increase their revenue and profit. As I mentioned earlier having rare holiday flavors attracts the customers and also holiday flavors are rare, so many people come and buy those flavors mostly everyday before the company stops selling them. If holiday flavors were sold everyday then the company would not be able to make good revenue and profit as the consumers would be tired of seeing or drinking the same beverage all year around. Therefore it is true that companies that sell holiday food items have a better revenue.
Works Cited
* All products require an annual contract.
Prices do not include sales tax
(New York residents only). “Starbucks: Revenue by Product Type 2017 | Statistic.” Statista, www.statista.com/statistics/219513/starbucks-revenue-by-product-type/.
Gensler, Lauren. “Starbucks Revenue Rises 12% During Strong Holiday Season.” Forbes, Forbes Magazine, 21 Jan. 2016, www.forbes.com/sites/laurengensler/2016/01/21/starbucks-first-quarter-earnings/#5a7a852419c6.
Heller, Matthew. “Dunkin' Donuts Franchise Boost Earns Profits.” CFO, 13 Feb. 2017, ww2.cfo.com/financial-performance/2017/02/dunkin-donuts-brands-profit/.
Images, KAREN BLEIER/AFP/Getty. “Holiday Drinks: A Mix of Science and Clever Marketing.” Marketplace, www.marketplace.org/2014/11/26/business/brought-you/holiday-drinks-mix-science-and-clever-marketing.
“Starbucks Reports Record Annual Profit.” BBC News, BBC, 4 Nov. 2016, www.bbc.com/news/business-37868620.
The return of a cult classic. “The McRib Is Back at McDonald's.” CNNMoney, Cable News Network, money.cnn.com/2017/11/02/investing/mcdonalds-mcrib/index.html.
equity, Growth Simple Qualitative Long/short. “Starbucks: Coffee Prices Don't Matter That Much.” Seeking Alpha, 28 June 2016, seekingalpha.com/article/3984994-starbucks-coffee-prices-matter-much.
fan, If you're a. “Why Pumpkin Spice Lattes and McRibs Aren't Sold Year-Round.” CNNMoney, Cable News Network, money.cnn.com/2017/11/06/news/companies/psl-mcrib-seasonal-items/index.html?iid=ob_article_footer.
I agree that having holiday products increases the amount of revenue these companies make. Since these products are only available for a limited time, the demand for them increases, which allows for the revenue to increase as well.
ReplyDeleteI believe it was a very good argument and I can understand how selling seasonal goods increases revenue of the businesses. But, another thought to think about is, would these seasonal goods be considered inelastic or elastic? If these products are in such high demand, companies could continue to raise their prices to see the elasticity of these goods. Also, another thing to think about is would elasticity depend upon the type of product or the company that is selling these products. Overall, great job and good use of visuals!
ReplyDeleteI agree with this because more people in this society want materialistic things. If a new iPhone comes out and someone gets it you get jealous in a way same way with Starbucks. Starbucks is heavily over priced coffee but it's popular so everyone wants what everyone else has. Though changing the cups due to seasons, Starbucks has got a lot of argument against them for Christmas Themed drinks because "not everyone celebrates Christmas". I am one of those people who waits all year for the pumpkin spice latte because it is one of my favorites. Even though some customers hate that you have to wait a whole year for it, they will still wait even if other places cell the same product, just because it is Starbucks. But it is a good sales move because when those drinks come around people buy them like crazy to get their bang for their buck while it's in season.
ReplyDeleteI agree with you on the fact that selling seasonal drinks will increase revenue, because the supply will be available for a limited time. But, I don't understand why you would bring in the issues people have with the holiday cups, as it most likely won't change much at all in terms of sales.
DeleteThis is a good example of how a limited quantity can give consumers a sense of urgency, thereby raising demand. I think more businesses have been increasing their use of "limited quantity" products recently in order to gain revenue and decrease the number of unsold products. The clothing brand Supreme is another example; similar to Starbucks' holiday drinks, their prices are high, but they sell out quickly due to the limited amount.
ReplyDeleteThe scarcity of these products definitely gives rise to the high demand. Demand rises not only because of the limited supply, but also because of the expectations surrounding the drinks. Many consumers expect the drink during a certain time of year (whether it be fall or winter) which makes them more likely to consume more. This "limited quantity" strategy works well for Starbucks, considering how many new "limited" drinks they are introducing (consider the "Unicorn Frappuccino" sold in April). By making special limited drinks, Starbucks can increase their revenue not just during fall and winter, but year round.
ReplyDeleteI have seen first hand what kind of effect a seasonal product can have on sales and Subway does something similar with their products by having limited edition subs. I think that its a great move because if the product is offered year round there is 2 potential problems. 1 is that the product wont match the season like having a Shamrock Shake in the middle of summer and 2 if that is a product someone gets all the time and it is the only thing that they buy from the menu it prevents them from getting sick of the product because before they know it the drink will be gone. Taste has an effect as well but I think that having seasonal products everyone loves is a great idea to keep consumers coming back year after year.
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