Starbucks brewing up 12,000 new locations in next five years
Starbucks (SBUX) is brewing ambitious growth plans, with the company outlining its vision for opening 12,000 new locations within five years.
The additional shops would rapidly boost the total number of Starbucks locations by almost 50 percent, helping the Seattle-based company achieve revenue growth of 10 percent annually and per-share earnings growth of at least 15 percent annually.
The brewer outlined its growth plans before investors in New York on Wednesday, about a week after it announced that Howard Schultz, who has built Starbucks into a global brand with 25,000 locations since joining the company more than 30 years ago, would step down as CEO in April.
Schultz, who becomes executive chairman, will be replaced as CEO by Chief Operating Officer Kevin Johnson. Shares of Starbucks Corp. have declined about 2 percent since the announcement. After the company revealed its expansion plans on Wednesday, shares advanced modestly.
Schultz stressed again Wednesday that he wasn’t departing Starbucks, and that he plans to oversee the growth of its high-end stores, called Starbucks Reserve Roasteries.
“I’m not leaving,” Schultz said at the investor conference. There has been “a lot of speculation about what I’m going to do and when I’m going to do it ... I’m here to do everything I can to lend my help and support in the areas I’m going to be focused on.”
Johnson, who was a technology executive at Juniper Networks and Microsoft before joining Starbucks, has overseen the coffee giant’s global supply chain, its human resources department, and its marketing and technology efforts, including launches of digital and mobile sales platforms. He’s also been a member of the Starbucks board for seven years.
A significant portion of Starbucks growth appears to be tied to China, where the ranks of the middle class are rapidly expanding. Schultz said he predicted Starbucks’ Chinese operations will eventually be larger than its U.S. business.
Belinda Wong, the CEO of Starbucks China, said the company’s 5,000 new Chinese locations will be spread across 200 cities, which she said would help triple its revenue and operating income.
“Over the next six years, another 300 million will also reach the middle class, reaching a total of 600 million people” in China, she said. “That’s almost twice the population of the U.S.”
In the meantime, its high-end Starbucks Reserve Roastery concept will expand into additional cities such as Seattle and Chicago next year, with plans to reach 1,000 globally. Starbucks said it’s also planning to open stand-alone Italian cafes through its partnership with Princi, a restaurant with locations in Milan and London that’s known for wood-fired breads and pizzas.
