December 6, 2012 in Business

Starbucks plans to open 1,500 cafes in the U.S.

Candice Choi Associated Press
 

NEW YORK – Another Starbucks may soon pop up around the corner, with the world’s biggest coffee company planning to add at least 1,500 cafes in the U.S. over the next five years.

Starbucks said Wednesday that 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 Starbucks’ 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.

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 new cafe.

Since Starbucks already has a broad footprint, the company’s expansion is intended to “deepen” its presence with additional stores in markets across the U.S., said Troy Alstead, Starbucks’ chief financial officer. That means establishing stores – including drive-thrus 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.

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