Page 71 - Bloomberg Businessweek-October 29, 2018

◼ BUSINESS Bloomberg Businessweek October 29, 2018

Frappuccino and lack of food innovations” were whipping up some new drinks, such as Oreo hot
hurting the company’s business. chocolate, to advertise after lunch—a period that
That’s pressuring Starbucks management to CEO David Hoffmann has identified as a long-term
fight the clock. “We still are seeing some pressure priority for the company.
in the afternoon,” Chief Executive Officer Kevin Afternoon restaurant visits were down 1 per-
Johnson said in June. “We’re putting more of our cent for the year ended in June, says NPD Group
energy into that afternoon daypart and the port- Inc. Customer traffic during that daypart was
folio of beverages that are offsetting some of the unchanged in the prior year and up 5 percent
declines we’re seeing in Frappuccino.” in 2016. But people are working and shopping at
Starbucks isn’t alone in watching its business home more—last year, almost a quarter of those
take a post-lunch siesta. Dunkin’ Brands Group employed in the U.S. did some of their work at
Inc., Wendy’s Co., and other restaurant chains are home, according to the Bureau of Labor Statistics—
having a hard time drawing a crowd in the after- and may not be able to leave the office in the mid-
noon. Americans are busier than ever— especially dle of the day. “Unless you’re in an urban center,
with the unemployment rate at a 48-year low of going requires leaving your work in your car,” says
3.7 percent in September—and eat out less fre- Bloomberg Intelligence analyst Jennifer Bartashus. ● Starbucks’s almond
quently. When they do head to restaurants, With low unemployment, fewer people are out protein cold brew
is one of the quaffs
they often expect healthier options than many and about looking for a coffee or cookie after the company has
chains provide. lunch, she says. “It’s part of the equation.” introduced to help
offset its waning
Fast-food purveyors have already boosted Dunkin’ Executive Chairman Nigel Travis also Frappuccino business
a once-slack part of the day: breakfast. On the says changing patterns of work are hurting sales.
strength of menu items such as its Egg McMuffin, Americans are going to work earlier, and Dunkin’s
McDonald’s Corp. turned the early morning hours sales between 4 a.m. and 5 a.m. are on the rise, he
into a popular part of its business, causing compet- said earlier this year. “People would rather go to
itors to follow suit. And McDonald’s three-year-old work and get it out of the way,” he said, noting that

22 all-day breakfast push in the U.S. helped it turn afternoon customers still “need to have a quick pit
around its worst sales slump in more than a stop and have a snack.”
decade. Yum! Brands Inc.’s Taco Bell chain has The chains that tend to do well in the afternoon
also seen success since adding egg burritos to its have something called “crave-ability,” says Dave
menu in 2014. Henkes, senior principal at restaurant industry
Now the industry is looking to crack the after- consultant Technomic Inc. “You just want some-
noon code. Starbucks this summer changed its thing, and that tends to be generally sweet,” he
format at 12 cafes in Nashville to draw more cus- says, noting that Cinnabon LLC and Krispy Kreme
tomers after lunch. First came after-lunch playlists Doughnut Corp. have done well in the afternoon.
of upbeat tunes specially chosen by the com- Both chains last year turned in bigger U.S. system-
pany’s entertainment team to help create a bar wide sales gains than Starbucks’s. Health-focused
vibe. Afternoon patrons could order from a new Jamba Inc. also has managed to lure customers
handheld paper “Chill Menu” that echoes a fancy post-lunch, Henkes says.
cocktail list. Among the seven new afternoon-only Starbucks’s latest drink, a plant-based protein
drinks on the bill: the “L&C”—espresso floating cold brew made with almond butter, takes a page
over lemonade and tonic, garnished with citrus from Jamba. Although there may be growth oppor-
mist, for $4.95. tunities with protein drinks and lower- calorie teas,
It remains to be seen whether enough people those are less “flagrantly fun” than things such as
(other than freelancers) will heed the afternoon the chain’s Unicorn Frappuccino, a color- changing
call. Rob Branca, a big franchisee of Dunkin’ stores pink-and-purple concoction that’s finished with
in New England, says people are in a rush and don’t whipped cream and sprinkled with pink and blue
necessarily want to linger or chill in restaurants, fairy powder, says Bill Chidley, partner at brand
whatever the time of day. “People don’t want to sit consultants ChangeUp Inc. “The Frappuccino
around,” Branca says. “Time is the No. 1 thing. Even was their point of entry in terms of product
on vacation, you’re trying to get to an event or to development—that certainly isn’t as powerful as it
the beach. It’s just the way life is now.” was,” he says. “Of course, they still have pumpkin
Dunkin’, Starbucks’s biggest U.S. rival, has taken spice latte.” �Leslie Patton
aim at slow afternoons with $2 snacks including COURTESY STARBUCKS
doughnut fries and soft-pretzel bites, along with THE BOTTOM LINE Afternoon restaurant visits fell 1 percent in
the 12 months ended in June, spurring fast-food chains to look for
$1.50 beverages from 2 p.m. to 6 p.m. It’s also ways to lure patrons into stores in the quiet time after lunch.