Starbucks Strengthened Against COVID-19, Plans to Add 20,000 Stores Worldwide

Aggressive Management Marking 50th Anniversary Next Year
2000 Small Coffee Shops Closed in the US... Survival Crisis

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Starbucks, a coffee franchise, plans to add more than 20,000 stores worldwide over the next decade. Amid the increase in contactless consumption due to the COVID-19 pandemic, Starbucks has chosen a more aggressive management strategy. Concerns have also been raised that small coffee shops will face even greater difficulties due to Starbucks' expansion strategy.

According to Bloomberg on the 9th (local time), Kevin Johnson, CEO of Starbucks, announced at the 'Investor Day' event held that day that the total number of stores worldwide will increase to 55,000 by 2030. Currently, Starbucks operates about 33,000 stores.

The aggressive store expansion strategy came ahead of Starbucks' 50th anniversary next year. CEO Johnson stated, "We see a runway that allows us to continue healthy growth," adding, "We are adopting a strategy of continuously investing in the right locations to strengthen competitiveness and sustainable growth over the coming decades." He further explained, "People will return to Starbucks stores at a much faster pace than before the COVID-19 pandemic."

The faster-than-expected recovery of Starbucks after the COVID-19 crisis this year also played a positive role in store expansion. Although third-quarter earnings fell 38% year-on-year, fourth-quarter sales are expected to recover to $6.2 billion. Additionally, from the 2023 fiscal year, Starbucks anticipates annual sales growth of 4-5% globally, including the United States, and expects sales in China to increase by up to 4%. CEO Johnson forecasted, "By September next year, total sales are expected to approach or exceed the pre-pandemic 2019 levels."

Wall Street views Starbucks as having secured a more dominant position in the market through the COVID-19 crisis, and the store expansion strategy is expected to further solidify this status. Starbucks' stock price, which fell to around $50 per share during the COVID-19 pandemic in March, recently surged by 80%, closing at $100.40 on the day. Starbucks' market capitalization stood at $117.8395 billion (approximately 128 trillion KRW).

On the other hand, small cafes worldwide face the threat of extinction due to Starbucks' aggressive business strategy. RJ Hotovy, Morningstar equity strategist, said, "Individually operated cafes cannot compete with the capital power of companies like Starbucks." According to market research firm Euromonitor, influenced by COVID-19 and other factors, about 2,000 coffee shops are expected to disappear in the United States alone this year. Corporate coffee chains are also in crisis. UK-based Pret A Manger laid off about 3,000 employees, and Caff? Nero is also struggling with financial pressure.

Global investment bank RBC Capital Markets evaluated, "Starbucks is one of the few large companies that can achieve double-digit growth after 2022."

This content was produced with the assistance of AI translation services.