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Starbucks unveils massive China plan to open 2,700 stores, triple revenue

Starbucks announced massive expansion plans after its highly lucrative distribution deal with Nestle, which netted the coffee chain some US$7 billion. Now, it’s shooting for almost double the amount of shops in China – the world’s second largest economy – to 6,000 from its current 3,300 in the next five years.

Broken down, this would mean a Starbucks opening roughly every 15 hours, and marks a notable increase on the company’s previous goal of 500 new locations per year. The plan is to triple operating profit and revenue by 2022.

While China is traditionally a tea-drinking nation – which Starbucks has capitalised on quite successfully in the past – the coffee chain is hoping to convert some of those drinkers to coffee, and is additionally betting on pre-made cold take-away beverages as a big driver of sales, as trends indicate that more and more consumers are opting for on-the-go.

In the same earnings report, Starbucks noted that the ‘My Starbucks Rewards’ loyalty programme has been extremely important to sales. While members only make up around a fifth of the customer base, they account for roughly a third of overall sales.  Membership of the programme expanded 12% to nearly 15 million, making it an important avenue of focus going forward.

To attract even more into the program, wants to expand some previously exclusive features like Mobile Order-and-Pay to non-members, leveraging Wi-Fi signup in stores, and promoting afternoon Happy Hour.

In December last year, Starbucks opened its largest store in Shanghai – a 30,000 square feet shop the size of about half a soccer pitch, and bought out all joint ventures in China for US$1.3 billion in the company’s biggest acquisition ever in July 2017.

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