Wednesday, November 26th3.7°C
23286
23488

Company perks $650M to open cafes

Starbucks, the world's biggest coffee company, is planning to add at least 1,500 cafes in the U.S. over the next five years.

The plan, which would boost the number of Starbucks cafes in the country by about 13 per cent, was announced at the company's investor day in New York Wednesday.

In addition, the Seattle-based company says it will eventually serve a new brand of tea in its cafes. Rather than its Tazo tea, Starbucks is turning its attention to Teavana, which it announced it would acquire last month.

Worldwide, the company says it will have more than 20,000 cafes by 2014, up from its current count of about 18,000. Much of that growth will come from China, which the company says will surpass Canada as its second-biggest market.

Although Starbucks has been intensifying its growth overseas and building its packaged-goods business back at home, the majority of its revenue still comes from its more than 11,100 cafes in the United States.

In an interview ahead of its investor day, CEO Howard Schultz said the U.S. expansion plans are based "on the current strength of our business"

Just a few months ago, the company had predicted it would open just 1,000 new cafes in the country over the next five years.

The upbeat expansion plans mark a turnaround from Starbucks' struggles during the recession. After hitting a rough patch, the company brought back Schultz as CEO in 2008 and embarked on massive restructuring effort that included closing 10 per cent of its U.S. stores.

Cliff Burrows, who heads Starbucks' domestic business, said the problem wasn't that Starbucks was oversaturated, but that the company hadn't been careful about its store openings. In the years leading up to the downturn, the company was opening well over 1,000 stores a year. That led to cafes in locations where signs or traffic might not be optimal, he said.

Burrows said Starbucks has gotten more sophisticated, and noted that the cafes opened in recent years are among the company's best performers.

Sales at new cafes are averaging about $1 million a year, for example, above the company's target of $900,000. It costs about $450,000 to build a new cafe, or about $650 million to open the new coffee shops.

The Canadian Press
How does this story make you feel? (76 total votes)
Castanet MoodMeter
Amused
2.6%
Annoyed
43.4%
Happy
10.5%
Sad
6.6%
Entertained
6.6%
Informed
30.3%


Read more Business News

23872


Recent Trending




Today's Market
S&P TSX15037.29-36.36
S&P CDNX773.48-7.16
DJIA17803.06-11.88
Nasdaq4779.465+21.213
S&P 5002070.24+3.21
CDN Dollar0.8902+0.0017
Gold1196.80-0.2999
Oil73.68-0.41
Lumber328.00-1.50
Natural Gas4.295+0.144

 
Okanagan Companies
Pacific Safety0.160.00
Knighthawk0.01-0.005
QHR Technologies Inc1.33+0.01
Cantex0.045+0.005
Anavex Life Sciences0.165-0.01
Metalex Ventures0.030.00
Russel Metals31.53-0.61
Copper Mountain Mining2.150.00
Colorado Resources0.130.00
ReliaBrand Inc0.0134-0.0001
Sunrise Resources Ltd0.045-0.005
Mission Ready Services0.33+0.005

 
24130


22970

FEATURED Property
2045729#701 1075 Sunset Drive
2 bedrooms 2 baths
$459,900
more details
image2image2image2
Click here to feature your property
Please wait... loading


The last great Canadian tax shelter

A guide to how flow-through fund limited partnerships can mightily aid your tax planning!The end of the year will raise concerns among many professionals, self-employed persons, business owners and ev...


What I learned in China: Part 2

As per my previous article on my visit to China, we have much to learn about and from their people. It is potentially the largest market on earth with 1.3 billion people in one country but much will d...


Retirement: Health Issues

Our health is really our greatest asset and maintaining our health is of tremendous importance. You want to do what you can to ensure that health issues will not jeopardize the enjoyment of your retir...

_



24119

24156


Member of BC Press Council


22842