Starbucks Wants to Triple Revenue in China in Four Years

Loaded With Nestle Cash, Starbucks Intends To Triple China Revenue

A doubling of stores would bring the company's total in 6,000 in the country.

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. "We can't control what happens in the geopolitical situation". "We are committed to long-term investment in China".

That's not the first time Starbucks has ramped up its China plans. 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.

Starbucks operates approximately 3,300 stores in 141 cities in China and employs 45,000 employees.

Starbucks also said it expects to more than double its operating income in China over the next 5 years, relative to 2017.

It made $3.24 billion in China/Asia Pacific revenue in the past financial year while operating income was $764.8 million, according to calculations by Reuters.

The Seattle-based firm is facing increasing pressure in the USA from high-end coffee shops and cheaper rivals and so it has turned its attention to the lucrative Chinese market. Consumers are also shopping more at home, shunning brick-and-mortar retail for e-commerce.

While same-store sales in the USA have been weaker than expected, strong performance in new stores means the firm is still on track "to deliver United States growth within the targeted range that we've given of high single-digits", Johnson said.

Currently, 60 percent of transactions in its China stores are through mobile payments.

This would amount to opening roughly 600 new Starbucks a year in China, or one every 15 hours, which would mark a considerable increase over the company's previous goal to build around 500 a year.



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