Starbucks raises guidance as wealthy customers splash out

Starbucks raised its fiscal year forecast above Wall Street's estimates, banking on its relatively well-heeled customers visiting more often and shaking off price increases.

The world's biggest coffee chain, which is coming off a years-long restructuring that involved closing poorly performing stores to rekindle growth, on Thursday reported better-than-expected fiscal third-quarter earnings.

Seattle-based Starbucks joined a raft of other premium-positioned companies – including burrito chain Chipotle Mexican Grill and Whole Foods Market – in reporting out-sized same-store sales gains.

"The higher end is alive and well," said RBC Capital Markets analyst Larry Miller. Steakhouses and seafood restaurants also had strong results, he said.

"Reports of the consumer's demise were greatly exaggerated," said Miller, who added that McDonald's Corp (MCD.N) and other restaurant chains showed surprising health during the latest quarter.

Sales at Starbucks' US cafes open at least 13 months, and which yield about four-fifths of its revenue, jumped 8 per cent in its fiscal third-quarter ended July 3. Analysts expected a 5.3 per cent increase.

Traffic in its home market climbed six per cent, while average spending per visit rose two per cent.

Chief Financial Officer Troy Alstead told Reuters menu price increases accounted for the bigger part of the rise in spending, but customers were also buying more food.

Starbucks targets more affluent consumers than the typical U.S. fast-food chain. Those customers have fared better than their lower-income counterparts as the US economy sputters.