On September 14, Starbucks’s China division officially released its 2025 China Strategic Vision, launching a new value-oriented growth plan featuring heavy investment in the country.
In the next three years, Starbucks China aims to accelerate its development potential through six growth engines and a series of major investments. By 2025, the total number of Starbucks stores in China is targeted to reach 9,000, while the number of employees will increase by 35,000, totaling more than 95,000. The firm also aims to double its net income and quadruple its current operating profit growth target.
In the past decade, the number of Starbucks stores in the Chinese mainland increased nearly tenfold, and it will reach 6,000 by the end of fiscal 2022. By 2025, it plans to open 3,000 new stores, covering 300 cities in China, at an average rate of one new store every nine hours.
In addition to accelerating the layout of its offline stores, the company will make full use of the growth opportunities brought by the digital platform and continue to develop its delivery business. At present, there are more than 5,000 exclusive delivery riders in China every day, and it takes only 19 minutes on average to deliver Starbucks coffee to customers. By 2025, the company plans to bring the sales volume of its delivery business to more than twice its current performance.
Starbucks will also aim to accelerate the operation of offline stores with digital technology. It will optimize staff experience by increasing investment in Internet of Things, machine learning and algorithm technology, control food safety in the whole process, and improve the efficiency of large-scale operations. In the next three years, the company will spend about 1.46 billion yuan ($220 million) to build Starbucks’ first exclusive digital technology innovation center in China, and drive multi-channel businesses with strong technical strength.
In addition, the Starbucks Coffee Creative Park, with an investment of about 1.1 billion yuan, will be officially completed and put into production in the summer of 2023. Starbucks China will complete the localization of the whole coffee industry chain, giving it the largest coffee roasting factory outside the US and Starbucks’s greenest coffee roasting factory in the world.
In fact, affected by the pandemic, Starbucks’s performance in China has shown a downward trend. According to a second-quarter financial report recently released by the firm, revenue in the Chinese market was only $540 million, down more than 40% year-on-year. Same-store sales fell 44% year-on-year, falling for three consecutive quarters. Luckin Coffee, a major Chinese coffee chain, has surpassed Starbucks in terms of number of stores, and the gap between the two companies in terms of revenue has further narrowed.