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.