Starbucks on Thursday reported record quarterly sales thanks to its robust U.S. business that helped make up for weakness in China and other markets.

The Seattle coffee giant said its U.S. same-store sales — or sales at locations open at least a year — jumped 22% in the July-September period. Stores saw higher traffic and customers spent more on pricier cold drinks, which made up 75% of U.S. sales, and food, which saw sales climb 35% in the fiscal fourth quarter.

“Routines are beginning to normalize,” said John Culver, Starbucks’ chief operating officer, on a conference call Thursday with investors.

Now that kids have returned to school in person, Starbucks’ peak hours have shifted back to the morning and early afternoon, Culver said. Stores in business districts — which were hardest hit during the pandemic — have returned to positive sales growth, he said.

But some pandemic habits are persisting. Drive-thru and mobile ordering made up 70% of transactions during Starbucks’ fiscal fourth quarter quarter, up 15% from pre-pandemic levels.


The story was different in China, which saw same-store sales fall 7% due to resurgent COVID cases. At the peak in August, 80% of Starbucks’ stores in China were impacted by virus restrictions, the company said.

“Our recovery in China will not be linear,” Starbucks President and CEO Kevin Johnson said. Starbucks remains bullish on China __ its second-largest market after the U.S. __ and opened 654 net new stores there in its 2021 fiscal year.

Earlier this week, McDonald’s also reported lower same-store sales in China due to COVID cases and a softening economy.

Globally, Starbucks’ same-store sales rose 17%, shy of Wall Street’s forecast of an 18.2% increase, according to analysts polled by FactSet.

Starbucks said its revenue rose 31% to $8.1 billion for the quarter, an all-time high. But that was still short of Wall Street’s forecast of $8.2 billion.

Starbucks reported its earnings one day after it announced pay hikes for U.S. workers. The company said workers in its U.S. stores will make at least $15 — and up to $23 — per hour by next summer. Starbucks is also giving raises to employees who have been with the company for at least two years.


Johnson said the wage hikes — along with previously announced increases — will result in $1 billion in incremental spending for the company in the 2021 and 2022 fiscal years. The company said the employee investment will temporarily reduce its operating margin to around 17% in its 2022 fiscal year, down from an adjusted operating margin of 18% in its 2021 fiscal year.

Johnson said the spending will ensure Starbucks remains “an employer of choice” in a tight labor market.

“’This is the right time to make that investment and we’re confident that it’s going return significant value to shareholders,” he said.

The company said its net income more than quadrupled to $1.76 billion in the fourth quarter, to $1.49 per share. Adjusted for one-time items, Starbucks reported earnings of $1.00 per share. That beat Wall Street’s forecast of 99 cents.

Starbucks shares fell 4% in after-market trading.