Starbucks is betting there aren’t enough Starbucks
Starbucks is betting there aren’t enough Starbucks
Starbucks is one of the largest coffee chains in the world. But it thinks it still has room to grow.
The company recently announced its Triple Shot Reinvention strategy, which includes expanding from more than 38,000 stores to 55,000 by 2030. In comparison, McDonald’s currently has 40,000 locations.
Is there a market for it?
You know those times when you’re on your way to work or wherever and you have just a few minutes to grab a cup of coffee, but you pull into the parking lot or run into the store and the line is intimidatingly long?
Darren Tristano, CEO of Food Service Results, an industry research group, said there’s a term for that.
“They do what’s called a look and leave,” he said. “They just decide, ‘I don’t have time for this.'”
That’s a big loss for Starbucks. And one reason that it may have room to expand, even in cities with multiple locations.
Because while the add-ons that make an upside-down caramel macchiato with extra caramel, vanilla sweet cream cold foam and caramel crunch are lucrative, they also increase wait times. So Starbucks is opening what it calls purpose-defined stores — locations dedicated to delivery and drive-thru.
“They can do 30% to 40% more volume through the drive-thru, especially during peak times,” Tristano said.
Starbucks thinks there’s plenty of room to grow in the U.S., but the majority of the chain’s new locations will be in other countries. It says a third of its earnings growth potential is overseas.
“In China in particular, the culture of coffee is growing,” said Miguel Gómez, a professor of food marketing at Cornell.
He said people there like to try new food trends. Plus, they’re supercomfortable with digital ordering and rewards, which Starbucks is planning to expand.
Now, admittedly, the economic forecast in China isn’t as sunny as it used to be. And it’s a little uncertain here in the U.S. too.
Sean Dunlop, a restaurant analyst at Morningstar, said this is the kind of moment when chains thrive.
“The larger chains that are able to negotiate better prices on raw materials and food and paper and better able to invest in systems that automate scheduling or automate inventory management and save costs,” he said.
And perhaps pass those savings on to customers who are still looking for affordable indulgences.
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