Loaded With Nestle Cash, Starbucks Intends To Triple China Revenue

Starbucks is shaping up an aspiring plan to compete in the race with KFC to become the quickest-growing foreign food chain with the unfolding of 600 new stores every year thus tripling the revenue by 2022. While brand new locations could be added by Starbucks at a faster pace due to the increasing demand in China, the coffee giant set its limitations regarding expansion to remain consistent regarding the store quality, Kevin Johnson, Chief Executive Officer in an interview on Tuesday told Shanghai. By 2022, it intends to set up on the mainland 6,000 stores, while the previous target was to set up 5,000 stores by 2021. “This is the perfect time for us to gain momentum that will boost the growth rate,” Johnson said in Shanghai, the day before Starbucks assembled 60 shareholders, the foremost to be conducted outside the U.S. “China has an extensive runway of opportunities for Starbucks.”

In China, Starbucks is growingly dependant on explosive momentum, leaving Starbucks with no rivals close enough to give a good competition, to support the disappointing growth of sales in the U.S. and other places. A deal of $7.2billion with Nestle previously this month offers Starbucks all the cash it requires to pursue its goal of expanding in China, which is within a decade is set to become the largest market of Starbucks. The company (Seattle-based) is also expecting to double more than its operating profit in China by the end of the fiscal year of 2022. In the Starbucks revenue, about 15% came from its China and Asia Pacific markets, which is about $3.2 billion, in the fiscal year of 2017, according to the data compiled in the company. In China, the current outlets are 3,300, with a comparison to the U.S. which has about 12,000 outlets, including the licensed stores.

The thrust as the second-largest economy in the world occurs as its stores in the U.S counter vicious rivalry from upcoming territorial coffee houses and favorable discounting from competing fast-food chains. Customers these days prefer shopping while sitting at home. In China, where the culture of cafes is less prevalent but e-commerce more in use and trend, Starbucks cafes have targeted the market on high quality, luxurious but casual meeting spots.

While the same sales of the stores in the U.S. have not reached the expectations, robust performance in the new stores in the Stateside means its business is on track again for delivering the anticipated rate of growth in the U.S., Johnson said.

Source: Bloomberg

You may also like: Nestle Pays $7.2 Billion To Starbucks To Collaborate In Selling Coffee