After a few sobering pandemic years, Starbucks is once again chasing growth in China, with sales climbing and the company planning another wave of investment in the country.
China’s stringent covid-19 lockdowns had caused Starbucks’ sales to plummet there last year. And even as the economy recovered, homegrown brands became the preferred choice of cash-strapped locals, over the American giant. But considering China is its largest international market, Starbucks didn’t give up on it.
Earlier this year, CEO Laxman Narasimhan noted that the coffee company, which opened its first Beijing store in 1999, is “still in our early days” in the historically tea-drinking nation.
To win over customers, Starbucks has upped its offering of localized menu options such as the mousse espresso. “We’re also seeing higher food sales, with tremendous headroom in this area, driving both transaction and ticket opportunities,” Narasimhan pointed out on the company’s earnings call this week.
Starbucks’ China growth story, by the digits
65%: Growth in the number of stores Starbucks operates in China since 2019, reaching 6,800-plus stores in 800 cities
9,000: Stores Starbucks is on track to operate in China by 2025
20%: How much higher China revenue was in the second half of the year versus the first half, “reflecting our growth momentum,” as per CEO Narasimhan.
$220 million: Investment Starbucks poured into the roastery and distribution center it opened an hour outside of Shanghai this September—more than double the amount shared in the initial plan in early 2020. It’s being touted as Starbucks’ “most energy efficient and sustainable coffee manufacturing and distribution center in the world.”
21 million: Active loyalty members Starbucks has in China, up 22% year-on-year, “with many members skewing younger to build our next generation of customers,” Narasimhan noted.
5%: Year-on-year increase in China same-store sales
8%: Increase in China revenues
3%: Decrease in China average ticket size
12: Cups of coffee consumed per capita annually in China, versus 380 and 280 in the US and Japan respectively. But in Shanghai, where there are more than 1,000 stores, per capita consumption is 100 to 150 cups.
Quotable: A “watershed year” in China for Starbucks
“We just concluded a watershed year in China, where we put the pandemic behind us, and built growth momentum for the future.”