Star­bucks puts spot­light on China as US growth cools

Global Times US Edition - - BIZOVE -

Star­bucks Corp’s new chief ex­ec­u­tive said the world’s big­gest cof­fee chain is mak­ing a long-term in­vest­ment in China.

Kevin John­son, who suc­ceeded Star­bucks co-founder Howard Schultz as CEO in April, is tasked with the dif­fi­cult job of find­ing new ways to de­liver the ro­bust growth that Wall Street has de­manded from the pop­u­lar chain.

US restau­rants are locked in a bit­ter fight for mar­ket share, bat­tling new com­pe­ti­tion from non-tra­di­tional ri­vals such as meal kit sell­ers and con­ve­nience stores.

Sales at its main­stay US cafes open at least 13 months rose 5 per­cent in the lat­est quar­ter. Traf­fic turned slightly pos­i­tive, re­vers­ing three straight quar­ters of de­clines that the com­pany at­trib­uted in part to chang­ing its loy­alty pro­gram to fo­cus on dol­lars spent rather than the num­ber of pur­chases they make.

Same-store sales from China, where there are 2,800 stores in 130 cities, were up a ro­bust 7 per­cent in the lat­est quar­ter. The 16,302 cafes in Star­bucks’ US-dom­i­nated Amer­i­cas re­gion con­trib­uted $974.8 mil­lion in op­er­at­ing in­come in the quar­ter. In con­trast, the 7,183 cafes from the China/Asia Pa­cific re­gion posted $223.8 mil­lion.

John­son told Reuters that the cash deal in China, which will give it own­er­ship of about 1,300 stores in Shang­hai and Jiangsu and Zhe­jiang prov­inces, is part of the com­pany’s “long game” in the coun­try that is its fastest-grow­ing mar­ket out­side the US.

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