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Starbucks Wants to Open 2,100 New Stores Next Year

Anya Yang, Staff Writer

Starbucks reported an increase of net revenues by 11% in its fourth quarter (which ended Sept. 30) to a record of $6.3 billion, caused by international sales rising 3%. The Seattle-based coffee chain added around 600 new stores in the most recent quarter and has over 29,300 shops overall. In 2017, it opened nearly 2,300 new locations. Now, Starbucks is planning to open 2,100 new stores globally next year.

The famous coffee company pointed to several explanations for its strong domestic performance. Afternoon sales have been skyrocketing, and the demand for iced drinks has gone above and beyond. Despite Frappuccino sales steadily waning, the company has bounced back with new drinks. Starbucks has expanded its cold drinks menu to include cold brew coffees and new low-sugar iced teas. This year, the chain also developed a new happy hour promotion to include drinks beyond Frappuccinos, and limited discounts to customers who register online or use the Starbucks app.

Seasonal items and promotions have also caused a boost in revenue for Starbucks. With the Pumpkin Spice Latte’s annual release, more and more customers visited the locations for the iconic fall treat. “It did a nice job for us in the quarter,” chief operating officer Roz Brewer said on an analyst call with CNN. Much-awaited holiday cups were also released Nov. 1.

However, the new store numbers will be impacted by the 150 underperforming shops closing in the 2019 fiscal year. According to Starbucks CEO Kevin Johnson, “The central similarities between the closing shops is redundancy with other locations or unnecessary franchise locations in places such as grocery stores.” It was not mentioned if the 2,100 new stores would have a specific focus.

Starbucks is also adapting their locations to how customers want to purchase their coffee. In the U.S., more than 80% of the new shops added in 2017 were drive-throughs. Brewer said that overall, drive-through locations “well outperformed” cafes in the fiscal quarter.

Store sales grew by 4% in the United States and 1%in China for the fourth quarter. “In Q4, Starbucks delivered improved sequential results in both our Americas and China/Asia Pacific segments. We also further set the stage for increased benefits from our ongoing efforts to streamline the company,” Johnson said. “Starbucks record Q4 performance reflected meaningful improvement in virtually every critical operating metric compared to Q3,” As we enter fiscal 2019, we are executing against a clear growth agenda, with a focus on our long-term growth markets of the U.S. and China.”

Although the store locations haven’t been determined yet, the company’s shares jumped around 9% in response to the positive earnings report.

Photo courtesy of FORTUNE.COM

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Starbucks Wants to Open 2,100 New Stores Next Year