Starbucks CEO Laxman Narasimhan has reaffirmed ambitious plans to open nearly 2,800 stores in China in less than two years as competition heats up in the resurgent post-pandemic market
Starbucks Taikoo Li flagship store in Chengdu | Photo credit: Starbucks
Starbucks CEO Laxman Narasimhan has reaffirmed the coffee chain’s goal of reaching 9,000 stores in China by 2025 during a visit to the country.
In September 2022 Starbucks said it planned to increase its store count across China by 50% with net unit growth of at least 13% annually.
The Seattle-based coffee chain reached its 6,000-store milestone in China later that month with an outlet at Shanghai’s Lippo Plaza store — its 1,000th outlet in Shanghai.
Starbucks achieved 10% outlet growth in China during its second quarter of 2023 to reach 6,243 stores nationwide and will ‘accelerate even faster on new store growth in the second half of the year’, according to Belinda Wong, CEO of Starbucks China.
On a visit to Shanghai, Narasimhan reaffirmed Starbucks’ 2025 target, which would require 44% outlet growth, and cited China's per capita coffee consumption as ‘leaving much room for business growth'.
However, Starbucks faces increased competition from Xiamen-based Luckin Coffee, which has also seen sales and outlet growth accelerate following the lifting of Covid restrictions and heightened consumer activity across China.
Technology- and value-focused Luckin Coffee surpassed its 9,000-store landmark in April 2023 after opening 1,167 sites in its first quarter to reach 9,381 nationwide.
Luckin Coffee’s revenues in the three months ended 31 March 2023 rose 84.5% year-on-year to reach RMB 4.4bn ($646m), a rise it attributed to increases in the number of products sold, stores in operation and monthly transacting customers.
Starbucks is also vying for market share in China with Cotti Coffee, a start-up launched by former Luckin Coffee executives Charles Lu and Jenny Qian in October 2022, and Tims China, which operates Canadian coffee chain Tims Hortons in the country.
Seeking to attract customers via its value-focused coffee menu and conveniently located stores, often near high footfall office districts in China’s largest cities, Cotti Coffee reportedly opened 1,300 stores across 181 Chinese cities in the last five months to March 2023, including opening 80 outlets in one three-day period.
The Beijing-based coffee chain plans to reach 10,000 stores across China by the end of 2025.
Meanwhile, Tims China reported 57% year-on-year revenue growth to reach RMB 1bn ($146.6m) in 2022 and opened 227 net new stores in 2022 to reach 617 outlets. The coffee chain plans to surpass 1,000 stores by the end of 2023.