The plan, which would boost the number of Starbucks cafes in the country by about 13 percent, was announced at the company’s investor day in New York Wednesday. Taking into account Canada and South America, the company plans to add a total of 3,000 new cafes in its broader Americas region.
Just a few months ago, the company had predicted it would open just 1,000 new cafes in the country over the next five years.
The upbeat expansion plans mark a turnaround from Starbucks’ struggles during the recession. After hitting a rough patch, the company brought back Schultz as CEO in 2008 and embarked on 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. That led to cafes in locations where signs or traffic might not be optimal, he said.
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 country, 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. The figure, a key metric of health, has ranged between 7 percent and 8 percent globally in the past three years.
After a string of acquisitions in recent years to build on its core business, Schultz indicated Wednesday that the company would hold off on any additional purchases in the near future, noting that the company has "enough to handle." Standard Examiner
