Will Starbucks Ever Stop Growing?
Starbucks saw its quarterly profit climb 26 percent thanks to strong sales growth in the U.S. and China, and it doesn’t appear that the coffee giant is done growing, reports The Wall Street Journal.
Starbucks credited its loyalty program for helping it outstrip most of its competitors such as Dunkin’ Brands (NASDAQ:DNKN) and McDonalds (NYSE:MCD), saying that the program was a major driver of traffic.
CFO Troy Alstead also stated that the loyalty program, which has recently extended to coffee purchases at grocery stores, helps protect Starbucks from negative outliers.
“Some of the ups and downs that perhaps others have experienced, driven by the payroll tax or weather…we believe we were fundamentally insulated from those types of movements,” Alstead said in an interview. “There’s not a question that we are seeing stronger transaction growth.”
And it appears Starbucks isn’t going to slow down anytime soon. The company’s global same-store sales rose six percent, including an eight percent growth in China and six percent jump in the U.S. There are plans to open thousands more locations in China, along with 300 new stores in the U.S. this year — a market once thought saturated…
So when will Starbucks’ ridiculous growth lose steam? There is no doubt Dunkin’ is struggling to compete in the coffee and breakfast market. Starbucks has made far more global and domestic plays, opening its first café in India and acquiring loose-leaf tea retailer Teavana Holdings for $620 million last year.
McDonald’s, too, has been expanding globally of late. But in its case, success comes more with cheap lunchtime products such as the Chicken Mythic sandwich in France and a variety of other chicken offerings in Asia.
With a proven ability to maximize expansion in seemingly saturated markets such as the U.S., there is no telling what Starbucks can do with the densely populated and ever-increasing coffee markets of China and India.
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