NEW YORK: Another Starbucks soon could pop up around the corner, with the world’s biggest coffee company planning to add at least 1,500 cafes in the United States over the next five years.
Starbucks said Wednesday it plans to boost the number of locations in its biggest market by about 13 percent by 2017. In the broader Americas region, the company plans to add a total of 3,000 new cafes by that time.
Starbucks also is planning to expand overseas, particularly in China, which is expected to surpass Canada as the company’s second-biggest market in the next two years. By that time, Starbucks says it will have 20,000 stores globally, up from about 18,000.
The upbeat expansion plans mark a turnaround from Starbucks’ struggles during the recession. After hitting a rough patch, the company brought back founder Howard Schultz as CEO in 2008 and embarked on a massive restructuring effort that included closing 10 percent of its U.S. stores.
Cliff Burrows, who heads Starbucks’ domestic business, said the problem wasn’t that Starbucks was oversaturated, but that the company hadn’t been careful about its store openings. In the years leading up to the downturn, the company was opening well over 1,000 stores a year. That led to cafes in locations where signs or traffic might not be optimal, he said.
Burrows said Starbucks has gotten more sophisticated, and noted that the cafes opened in recent years are among the company’s best performers. Sales at new cafes are averaging about $1 million a year, for example, above the company’s target of $900,000. It costs about $450,000 to build a cafe.
Because Starbucks already has a broad footprint, the company’s expansion is intended to “deepen” its presence with additional stores in markets across the United States, said Troy Alstead, Starbucks’ chief financial officer. That means establishing stores — including drive-throughs and smaller cafes — in more convenient locations for customers. And even as it expands, Starbucks said it expects to maintain growth at cafes open at least a year. The figure, a key metric of health, has ranged between 7 percent and 8 percent globally in the past three years.
The continued U.S. sales growth will be fueled by the new products, such as Evolution premium juices and Via single-serve coffee packets. Starbucks also is looking to improve its food menu and is testing baked goods from La Boulange, a small San Francisco chain it acquired this year. The new croissants, loaf cakes and other items will spread to about 2,500 cafes next year and go national sometime in 2014, Burrows said. The company says only about one-third of customers buy food with their drinks.
In a test aimed at building sales in the evening hours, the company also started serving beer and wine at a dozen locations this year, with such foods as chicken skewers and dates wrapped in bacon.
Most recently, Starbucks announced plans to acquire Teavana, a chain that has 300 locations in shopping malls. When the announcement was made last month, Schultz said the company would “do for tea what it did for coffee.”