Starbucks Jolts Past Burger Joints

Starbucks has regained favor with coffee drinkers but the company warned that rising costs will severely impact its bottom line in coming quarters.

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In the thick of the recession, Starbucks was forced to close stores as customers looked elsewhere for their caffeine fix. But latte-loving Americans have brought the java giant back. Its profits shot up 20 percent, and it was just ranked as the No. 3 U.S. chain restaurant.

In earnings released late Wednesday, Seattle-based Starbucks Corp., said a growing customer base helped drive its second-quarter net income up 20 percent. Revenues rose nearly 10 percent to $2.79 billion, beating analyst expectations of $2.73 billion, although its per-share earnings forecast of $1.46 to $1.48 per share falls short of Wall Street's average expectation of $1.49 per share, with the company saying higher commodity costs will hurt earnings this fiscal year.

More compelling, though, was the fact that the coffee chain, which recently changed its logo to eliminate the name Starbucks Coffee and just leave the iconic green mermaid—blasted past Wendy’s and Burger King to become the No. 3 restaurant chain in national sales, according to Technomic's recently released 2011 Top 500 Chain Restaurant Report.

For years the top three chains in the U.S. were the fast-food troika of hamburgers and fries: McDonald's, Burger King and Wendy's. But a new king has been crowned. With $9.07 billion in U.S. sales, up 8.7 percent from the prior year, Starbucks had de-throned Burger King and pushed aside Wendy’s, and is surpassed only by McDonald's and No. 2 Subway, said a report in Ad Age.

McDonald's, a fixture at the top of the list, was No. 1 in 2010 U.S. sales, standing at about $32.4 billion in U.S. sales in 2010. Subway, which operates 9,000 more locations in the U.S. than McDonald's, generated about $10.6 billion in U.S. sales, according to the report.

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