Starbucks doubles down on Asia Pacific with biggest expansion in five years

By Michelle Toh, CNN

Starbucks will open more than 400 stores across Asia Pacific in 2023, marking its biggest expansion in the region in five years.

The coffee chain plans to add the new outlets in India, Indonesia, Thailand, Malaysia, Laos and the Philippines, where it aims to expand beyond major cities. It will open one outlet in Laos, a Southeast Asian market the company only entered last year, it said in a statement Thursday.

The move is intended to seize on Asia’s reopening as it continues to bounce back from the Covid-19 crisis, according to Michael Conway, Starbucks’ president of international and channel development.

“We are seeing headwinds shifting to tailwinds across markets around the world, including the Asia Pacific region, and continued recovery coming out of the pandemic,” he said in the statement.

“The Asia Pacific region will continue to be a key growth driver for Starbucks globally and we remain optimistic of its long-term growth and opportunities, underpinned by a growing middle class and rising coffee consumption.”

Asia Pacific, which Starbucks manages separately to its business in mainland China and Japan, is one of the beverage giant’s biggest growth opportunities.

Mainland China is the chain’s fastest-growing market, though its business there has stumbled lately.

Same-store sales in China fell 29% in the three months to January 1, the company said in an earnings presentation earlier this month. The metric refers to sales at stores open at least 13 months.

Starbucks’ interim CEO Howard Schultz cited “Covid-related headwinds that unfolded in China” during the period.

The company’s locations elsewhere proved to be bright spots during the quarter, with revenue jumping by more than 20% year-on-year for Asia Pacific, Conway said during the presentation.

“Our markets outside of China performed even better than we thought,” he told analysts.

Now, as it casts a wider net, Starbucks wants to switch up the format of some of its stores.

In its statement Thursday, the company pointed to one of its newest locations, a drive-thru that opened last month in South Korea and brought its store count in the region to 5,000.

Drive-thrus are becoming more popular, as customers look for more convenience, according to Emmy Kan, the firm’s Asia Pacific president.

Starbucks plans to add more than 100 such stores in the region this year, bringing its tally to more than 700 regionally.

Some of those locations have also rolled out options for customers to book private rooms for events. The company started a similar initiative last year in China.

The-CNN-Wire
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