Starbucks sees its fast-growing China business overtaking its US market one day

mercredi 7 décembre 2016

Starbucks said Wednesday it plans to open 12,000 additional stores globally in the next five years, taking the chain to a total of about 37,000 outlets.

Half of the new units will be in the U.S. and China.

"Demand is there, and our ability to deploy capital and get the return on invested capital is very strong," Kevin Johnson, president and COO of Starbucks, said at the coffee chain's investor day event in New York. Johnson will become CEO in April, succeeding Howard Schultz.

The Seattle-based company also is focusing on both its flagship Starbucks stores and the higher-end Reserve Roastery and Tasting Room outlets for the future growth. The company also has targeted the Reserve Roastery stores, which will sell premium coffee at around $10 a cup, to represent about one-fifth of total outlets by 2021.

Also, Starbucks plans to open new stand-alone outlets under Princi, a high-end Italian bakery the company invested in over the summer. The bakery will serve pizza and have locations in major markets such as New York, Seattle and Chicago by 2018. Also, Princi food is expected to be offered at all of the company's new Roastery locations.

At the meeting, Starbucks presented a five-year strategic plan to grow revenue by 10 percent and earnings per share to 15 to 20 percent. At the same time, the company targeted "mid-single digit" comparable-store sales each year.

"We feel we have ample opportunity for growth across the U.S.," said John Culver, group president-global retail for Starbucks. He said the company's ongoing expansion domestically has been without any significant cannibalization from new stores.

Culver also said the company plans to continue expanding the number of drive-thru locations in the U.S.

"The investments that we've made all through the years have built a very strong foundation," said Culver. "We feel we're in a great position to grow and grow profitably well into the future."

On the international front, China remains the company's fastest growing market and management sees revenue and operating income nearly tripling there over the next five years. The chain is opening a new Starbucks store in China about every 15 hours and will soon reach 2,500 stores in 118 cities.

"Despite our early success, we are only in the beginning chapters of our growth story," Starbucks China CEO Belinda Wong told analysts Wednesday. "In the next five years, we're well positioned to double our scale to 5,000 stores in over 200 cities."

Wong said urbanization and an emerging middle class in China will help drive the rapid expansion of the specialty coffee market.

According to Wong, more than 230 million people in China have been lifted into the middle class in the past decade due to the Asian nation's booming economy, and over the next six years she said another roughly 300 million people will also attain middle-class status.

"Coffee consumption in China is currently low, but growing rapidly," Evercore ISI analyst Matt McGinley said in a research note this week. "On a per person basis, Chinese people consume less than 2 percent of the coffee of U.S. consumers and less than 3 percent of the coffee of Japanese people."

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Starbucks sees its fast-growing China business overtaking its US market one day

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