Starbucks Corp is planning to more than triple its revenue and almost double its store count in China over the next five years.
The U.S. coffee chain, which recently raised $7.15 billion in a deal with Nestle, is doubling down on the market as traffic growth comes under pressure in the United States.
The coffee giant aims to have 6,000 stores in the country by the end of 2022, it said in a statement. It has around 3,300 stores in 141 cities in China currently.
While Starbucks could add new locations at an even faster pace because of the demand in China, the coffee giant is limiting expansion to maintain store quality, chief executive Officer Kevin Johnson said in an interview in Shanghai on Tuesday.
“This is an ideal time for us to accelerate that growth rate,” Johnson said ahead of the investor day Starbucks organized for 60 shareholders in Shanghai, the first to be held outside of the U.S. “China has a long runway of opportunity for Starbucks.”
Domination in China
Starbucks dominates China’s coffee scene, although it is seeing more competition from smaller rivals, similar to how it is coming under pressure from a “third wave” of boutique coffee sellers and cheaper rivals in the United States.
Late last year it launched its first overseas “Reserve Roastery” – an opulent flagship store with gourmet coffees and a bakery – in Shanghai, where executive chairman Howard Schultz told Reuters store numbers in China would hit 10,000 within a decade, overtaking even the U.S. market.
Starbucks is increasingly reliant on explosive momentum in China, where it has no close rivals, to prop up underwhelming sales growth in the U.S. and elsewhere.
A $7.15-billion deal with Nestle SA earlier this month gives the coffee giant the cash to pursue its goal of accelerating expansion in China, which is set to become Starbucks’ largest market within a decade.
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