Starbucks has been hard hit by the recession as consumers cut back on items such as gourmet coffee. It has closed many locations to save money. But now the company says that demand is starting to pick up.
Chief Executive Howard Schultz said in a conference call that a "more disciplined focus on operations" helped the company increase earnings and that it is seeing improvements in its surveys of customer satisfaction.
During the quarter, Starbucks cut prices on so-called easy-to-make coffees, while lifting prices by as much as 30 cents for larger and more complex drinks, such as a venti caramel macchiato.
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Mr. Schultz said the company is encouraged by the national rollout of its Via instant-coffee product. Via is "resonating with customers" and is having little negative impact on traditional coffee sales at Starbucks, he said.
Starbucks began making Via available in September in all its cafes in the U.S. and Canada, as well as in other locations such as hotels and bookstores. The company created Via, which costs $2.95 for a three pack, to try to reach consumers who aren't inclined to splurge on a regular coffee purchase.
Starbucks, which has about 11,000 U.S. outlets, reported $53.2 million in restructuring charges for its fourth quarter, almost all of which stemmed from store closings. The company said it had shuttered nearly all of the roughly 800 U.S. stores and 100 international stores in its previously announced store-closing plans.
The company is cautiously optimistic about the upcoming holiday season.
London's Independent Gourmet Coffee Shops Say Business is Booming
Sarah McFarlane reports from London about an industry that is booming despite the recession: the niche gourmet coffee shops. Consumers who are cutting back on clothing and car purchases are making an affordable luxury such as a perfectly brewed cup of gourmet coffee part of their daily morning routine. Smaller shops, such as Sacred Cafe in London are packed with customers who want a unique, high-end coffee. Importers regularly hold tastings for the cafe owners, who want to find that special coffee that will make their shop stand out. Take a look:
Many Coffee Drinkers Cutting Back on Gourmet Takeout Coffee
Advertising Age commissioned Lightspeed Research to study the habits of coffee drinkers. The study found that many coffee drinkers are cutting back on the lattes and other caffeinated beverages they purchased from gourmet cafes like Starbucks. Instead coffee drinkers are brewing their coffee at home or opting for less expensive takeout coffee.
Ad Age's study found that 60% of Americans have already scaled back on fancy or expensive coffee in the past six months and 56% report cutting back just since the start of 2009. 90% of the people cutting back told AdAge they were doing it to save money, which means the decision is related to the recession. Ad Age also says consumers traded down for a lower quality coffee or they started brewing more coffee at home.
The biggest shift seems to be in mind-set, as latte lovers trade down rather than out of their fancy-coffee fixes by drinking less, going to less-expensive places or brewing at home. "I started buying my coffee at less-expensive places," said one respondent. "I have it once a week to indulge myself," said another. "I went from once a week to once a month," said a third. "I drink lots of home-brewed coffee, whereas before I would only drink a venti Starbucks," said a fourth.
The survey didn't get data on what percentage of the people cutting back on gourmet takeout coffee are now brewing at home. People who have the time to brew a pot of coffee at home are probably more likely to save money that way because you can still control the quality of the coffee. People on the road a lot may not have this options and have to buy a cheaper takeout coffee in order to save money.
This reduction by consumers in coffee purchases combined with a predicted 26% surge in coffee prices looks like bad news for the nation's gourmet coffee shops.
Advertising Age commissioned Lightspeed Research to study the habits of coffee drinkers. The 
