Coffee juggernaut Starbucks outperformed earnings expectations last quarter, sending the stock shooting up 12% since Thursday when it reported results for fiscal 2023. That was good for a single-day jump of about $10 billion in Starbucks’ market cap on Thursday. Executives attributed much of the coffee chain’s success this quarter to a new plan to improve working conditions in stores meant to help employees do their jobs better. Starbucks improved pay and scheduling headaches for in-store employees, replaced old equipment, and lowered turnover, all part of an effort to “reinvigorate the partner culture at Starbucks,” CEO Laxman Narasimhan told investors on an earnings call. Given the results Starbucks posted it appears to be working, and could be emblematic of a trend across the economy.
Starbucks saw strong results across the board in terms of revenue, same store sales, transactions, and check size, which it attributed in part to its ability to be more productive. It’s a trend that’s been prevalent across the economy in the third quarter as productivity rose alongside worker pay. As the Axios Markets newsletter pointed out, economists have been surprised after years and years of stagnating productivity, including two straight quarters of decline in 2022, but Starbucks’ blowout quarter is an early sign that this won’t be business as usual.
