TIMOTHY A. CLARY / Getty Images
- Cold drinks now make up 74% of Starbucks' total beverage sales, CEO Kevin Johnson said Tuesday.
- Johnson said that cold drinks were especially popular among younger customers.
- "A lot of the drinks seem like milkshakes rather than coffees," one barista told Insider.
- See more stories on Insider's business page.
Starbucks is selling way more cold drinks than hot coffee – so much so that it's becoming a "frappuccino factory," according to one employee.
Cold drinks made up 74% of Starbucks' total beverage sales in the third quarter, up from 64% two years ago, CEO Kevin Johnson said on the company's third quarter earnings call Tuesday. The figure has grown from just 37% of all drinks orders in 2013.
Johnson credited the rise to strong demand for Cold Brew, Nitro Cold Brew, Iced Shaken Espresso, and Refreshers.
He added that the chain's cold drinks were "particularly attractive to millennial and Gen Z customers." And these drinks tend to cost more than hot beverages, Rachel Ruggeri, Starbucks' chief financial officer, said.
Johnson said that this high demand for cold drinks, coupled with more people customizing their drinks and adding food to their orders, helped the chain to post its highest-ever net quarterly revenues of $7.5 billion, a 78% increase year-over-year.
Starbucks baristas told Insider that they're being flooded with orders for cold drinks, saying that they often take longer to make than hot drinks.
One Starbucks shift supervisor in Maryland, who spoke on the condition of anonymity to protect their employment, told Insider that the chain was becoming a "frappuccino factory." They said that they made more frappuccinos than hot espresso-based drinks most days.
"Starbucks is a coffee shop that is known for not making coffee," they said. "The fact that we have this other stuff is just to appease the people who don't like coffee who happen to be with the people who like coffee."
A barista in Nebraska, who spoke on the condition of anonymity to protect their employment, said: "A lot of the drinks seem like milkshakes rather than coffees."
Baristas told Insider that the cold drinks caused problems with mobile ordering because they could melt if customers didn't collect their orders quickly enough. Sometimes the baristas would have to remake the drinks, the baristas said.
Insider previously reported that baristas were being flooded with orders for TikTok-inspired drinks, with one barista saying they made up to 15 iced white mochas a day, which cost around $7.60 each for a "grande" size.
Cold drink sales grew by nearly 45% between 2016 and 2020, Starbucks said at its investor day in December. People under 30 are twice as likely to order cold drinks, the company said.
Because of the huge demand for cold drinks and Cold Brew in particular, the chain is rolling out a new system that makes brewing Cold Brew more efficient, thereby saving baristas time, John Culver, group president of international channel development and global coffee, tea, and cocoa, said during Tuesday's earnings call. The system is currently in place in 2,000 US stores and will be in 75% by the end of the year, Culver said.
Do you work at Starbucks? Got a story to share? Email this reporter at [email protected]. Always use a non-work email.