Why did Starbucks surge on Wednesday? A confident outlook, labor maneuvers
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Shares of Starbucks Corporation (NASDAQ:SBUX
+9.8%) perked up nearly 10% on Wednesday after courting market confidence on the roadmap for the company.

In particular, investors were encouraged by strong demand dynamics in the U.S. where same store sales rose by double digits and worked to counteract crashing demand in China as stores were shuttered due to pandemic restrictions. In a case of a good problem to have, CEO Howard Schultz indicated that US demand is so strong the company is having difficulty handling it.

âWe've been unable to meet the relentless demand we're seeing in our U.S. stores as seamlessly as our customers and partners expect and candidly deserve,â he lamented. âSimply said, we do not, today, have the adequate capacity to meet the growing demand for Starbucks coffees.â

Moving forward, Schultz said the company will be making investments in improving stores and adding to digital capabilities to capitalize on this demand and continue to grow. In this commentary, the CEO appeared to assuage concerns on the mixed first quarter report and encouraged optimism on the companyâs ability to accelerate into the end of the year as demand remains incredibly resilient. 

This optimism was indeed echoed by analysts.

"We remain confident in the long term story given the strength of the U.S. sales playbook and long term development opportunity in China given strengthened new unit economics prior to the recent COVID-19 wave,â Cowen analyst Andrew Charles commented.

Schultz also headed off the union issue by indicating the company would raise wages 

He indicated the chain will raise wages for tenured workers and double training for new employees at cafes that have not voted to unionize. 

âAt stores where workers have union representation, federal law requires good faith bargaining over wages, benefits and working conditions which prohibits Starbucks from making or announcing unilateral changes,â Schultz explained. 

Of course, a rally sparked by the Federal Reserve statement on Wednesday afternoon helped lift nearly all boats. Starbucks (SBUX) was no exception as it rallied into the closing bell after Chair Powellâs comments. 
Read more on the key points from the quarter.