Full steam ahead for Starbucks

It may be scaling back elsewhere, but Starbucks is not giving up on its UK expansion plans...

by
Last Updated: 06 Nov 2012

Starbucks reckons it is still on course to open 100 new coffee shops in the UK this year, despite reporting its first ever quarterly loss last week. After ending the three months to June $6.7m in the red (following a fourth consecutive quarter of declining sales), Starbucks CEO Howard Schultz has opted for some radical surgery: he’s closing down more than 600 US stores, and about three-quarters of its Australian outlets. But here in the UK, it’s determined to keep steaming ahead…

Despite the fact that we’ve been drinking fewer skinny decaff frappucinos during the last few months – like-for-like sales fell last quarter, although that may be partly due to the weather being a lot better this year than it was last – Starbucks says that it is pressing ahead with a deal to open 150 outlets in airports and train stations (as part of a tie-up with catering group SSP). So far this year, it has already opened 78 new stores, taking its total to 679, and plans to hit the 100 mark by the time the year is out.

The big question is whether people will still be willing to spend £2 on a cup of milky coffee if the economy continues its downward spiral. Starbucks has already closed 10 stores this year (some of which were because of poor sales), and many observers reckon that this kind of discretionary purchase will fall by the wayside as people continue to tighten their belts.

However, UK boss Phil Broad thinks differently – he told the Times today that with so much doom and gloom around, punters will ‘still want to treat themselves to ... [what is] an affordable luxury’. Admittedly he would say that, but he is still talking a good game: ‘We have seen steady consumer-led growth in the UK market and we remain excited by the opportunities presented by [it],’ he added. Time will tell who’s right.

Obviously it will depend to some extent on how bad things get in the UK – and also on whether Starbucks can keep raising its game to fend off competitors (Schultz and co will hope that some of the ideas currently being introduced from its highly-successful innovation site MyStarbucksIdea.com will help on this front). But for the time being, it looks like the coffee giant will be getting ever more ubiquitous...


In today's bulletin:

HSBC slides amid US woes
Airlines say BAAA to fuel prices?
Full steam ahead for Starbucks
Charity begins at work
What's the point of a foot spa? 

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