According to the Wall Street Journal on September 14, Starbucks plans to increase the number of stores in China by 50% in the next three years. It shows strong confidence in the largest market outside the United States.
Starbucks to open 3000 new stores
Starbucks announced at an investor conference that it plans to increase the number of stores in China to 9000 by 2025. The company had previously said that it expected that the number of its stores in China would reach 6000 by the end of this year.
Starbucks also said that the revenue in China will nearly double in the next three years. After this year’s downturn, the same store sales will grow strongly from the 2023 fiscal year.
Executives of the company are optimistic that the problems caused by the COVID-19 epidemic will be temporary. The next year’s revenue will increase significantly as sales rebound.
High potential market for the long run
The coffee market in China is still in its infancy and has a lot of room for growth. The per capita annual consumption of coffee by Chinese consumers has increased from less than 3 cups in 2014 to 10 to 12 cups at present.
According to the report, 13% of Starbucks’ revenue in fiscal year 2021 comes from China. Literally, China has become the largest market outside the United States.
Future investments
While targeting the Chinese market, Starbucks is carrying out a comprehensive reform of its business and plans for China. It will spend hundreds of millions of dollars to upgrade its stores to improve customer service. In addition, it will also invest a lot to reduce the loss of human resources because of the epidemic.
Starbucks also faces challenges from many local competitors. Its biggest challenge comes from Luckin. In addition, it also faces competition from lower priced brands such as Manner Coffee.
Strong competition
According to the second quarter report released by Luckin, its revenue in the current period was 3.3 billion yuan, up 72.4% year on year; In the Chinese market, Starbucks has a revenue of less than 600 million yuan. Judging from the number of stores, Luckin has gained advantages. In the second quarter, Luckin added 615 stores, and by the end of the second quarter, there were 7195 stores. Among them, 4968 are self operated stores and 2227 are franchise stores.
Deep Digital China will continue to report on the coffee market in China.