Is cold the new hot at Starbucks?

The cold business at Starbucks is hotter than ever as sales of unheated drinks reached 75% of U.S. beverage sales during the chain’s third quarter, which ended with same-store sales growing by 10%, missing Wall Street estimates by 1%.

“As the leader in premium coffee, we are particularly encouraged to see cold espresso beverages were up 13% year over year,” CEO Laxman Narasimhan said during Tuesday’s investor call. ” Easier-to-use portable handheld cold foam blenders continue to have an outsized impact for both the partner and customer experience.”

The blenders are in all U.S. company-operated stores and are meeting the summer’s demand for Starbucks Refreshers’ frozen beverages, which have seen double-digit growth this past quarter in every daypart. The blenders also support the growth of cold foam, the fastest-growing customization at Starbucks.

“Modifiers, such as cold foam, now contribute to over $1 billion in revenue annually,” Narasimhan said.

Q3 fiscal 2023 highlights:

• Global comparable store sales increased 10%, primarily driven by a 5% increase in comparable transactions and a 4% increase in average ticket.
• North America and U.S. comparable store sales increased 7%, driven by a 6% increase in average ticket and a 1% increase in comparable transactions.
• International comparable store sales increased 24%, driven by a 21% increase in comparable transactions and a 2% increase in average ticket; China comparable store sales increased 46%, driven by a 48% increase in comparable transactions and a 1% decline in average ticket
• Opened 588 stores, crossing the 37,000 store count threshold globally, ending the period with 37,222 stores: 51% company-operated and 49% licensed
• Stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,144 and 6,480 stores in the U.S. and China, respectively
• Consolidated net revenues of $9.2 billion, up 12% from the prior year, or 14%, inclusive of more than 1% unfavorable impact from foreign currency translation

“Our strong third-quarter results point to all-around momentum in the business, and reflect the significant progress we are making against our Reinvention Plan,” Narasimhan said in a company press release. “Our results were also amplified by the distinctive competitive advantages that set us apart in the market.”