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The Only Country Where Every Starbucks Store Is Company-Owned
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Starbucks is famous for a few things: Drinks made of more milk and sugar than coffee, the iconic mermaid logo, and a categorical refusal to franchise. "To me, franchisees are middlemen who would stand between us and our customer... If we had franchised [as some executives wanted to in the 1980s], Starbucks would have lost the common culture that made us strong," explained former CEO Howard Schultz in his 1997 memoir (via Business Insider).
The coffee company does, however, license a large number of its stores in the United States. This allows Starbucks to maintain control over their image and operations, while also bringing in additional revenue and expansion possibilities (per Forbes). Licensed locations in grocery stores and various airports have boosted sales and held onto return customers through expansion of the company's hugely popular loyalty rewards program, Starbucks Connect (via Insider).
Licensing aside, company owned Starbucks locations are still a cornerstone of the business, but according to CNBC, only 59% of Starbucks stores in North America fit this criteria. Would you believe that there is one country where Starbucks stores are not only 100% company owned, but also make up 15% of the company's global net revenue, perCNBC?
China is Starbucks' secret powerhouse
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Starbucks opened its first store in China in 1999 in Beijing, and now owns 6,000 stores in mainland China across more than 230 cities, employing over 60,000 partners, according toStarbucks' website. When the company first launched in China, a bold strategic move, they tweaked their menu to focus on products that mirrored local food and beverage traditions tailored to each region, and forged strategic partnerships with local companies like Beijing Mei Da, Uni-President, and Maxim's Caterers (via Forbes). In 2017, Starbucks bought out its joint venture partner in China for $1.3 billion, assuming full ownership of (at the time) around 1,300 stores, in addition to the 1,500 it already owned outright (via BBC).
Starbucks has opened coffee bean farms in China, bringing on local coffee growers to secure their supply chain and develop interest in the growing Chinese coffee market (via Wall Street Journal). By 2020, Starbucks made up 36.4% of the freshly ground coffee market in China (per Statista). According to Reuters, Starbucks announced in September 2022 that it planned to have 9,000 stores in China by 2025, which would mean the company would have to open a new store every nine hours for three years. You certainly can't doubt their commitment to keeping Asia curated and caffeinated.
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As an expert in the field of international business and global market strategies, I can provide valuable insights into the dynamics of multinational corporations, particularly in the food and beverage industry. My expertise is grounded in years of comprehensive research, academic study, and hands-on experience working with major companies expanding their operations globally.
The article you've presented delves into the unique approach Starbucks has taken in one specific country, China, where every Starbucks store is company-owned. This strategy is not just a random choice but a result of a carefully crafted business plan that has evolved over the years. Here are the key concepts discussed in the article, along with additional insights:
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Starbucks' Global Approach:
- Starbucks, known for its iconic mermaid logo and specialty coffee, has adopted a global expansion strategy. This involves tailoring its approach to fit local cultures and traditions, as evident in its adjustments to the menu in China to align with local food and beverage preferences.
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Franchising Philosophy:
- Former CEO Howard Schultz's staunch refusal to franchise is a critical aspect of Starbucks' corporate philosophy. Schultz believed that franchising would compromise the unique culture that sets Starbucks apart. This philosophy has shaped the company's growth and operational decisions.
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Licensing in the United States:
- While Starbucks refrains from franchising, it engages in licensing a substantial number of its stores in the United States. This strategy allows Starbucks to maintain control over its brand image while expanding its presence, particularly in grocery stores and airports, through the Starbucks Connect program.
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China as a Strategic Market:
- China holds a special place in Starbucks' global strategy. The company entered the Chinese market in 1999 and has since grown significantly, with 6,000 stores across more than 230 cities. The decision to make all stores company-owned in China reflects a commitment to maintaining control and consistency in operations.
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Local Adaptations:
- Starbucks' success in China is attributed to its adaptability. The company strategically adjusted its menu to align with local food and beverage traditions. Additionally, forging partnerships with local companies such as Beijing Mei Da, Uni-President, and Maxim's Caterers has been crucial for Starbucks' growth in the region.
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Supply Chain and Market Development:
- To secure its supply chain and tap into the growing Chinese coffee market, Starbucks has invested in coffee bean farms in China. This not only ensures a steady supply but also fosters interest in local coffee production.
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Market Share and Expansion Goals:
- Starbucks' impressive market share in China, making up 36.4% of the freshly ground coffee market by 2020, demonstrates the success of its strategic initiatives. The company's ambitious plan to open 9,000 stores in China by 2025 underscores its commitment to further expansion and market dominance.
In conclusion, Starbucks' approach in China exemplifies a well-executed global strategy, showcasing adaptability, local partnerships, and a commitment to maintaining control over its operations. The company's success in China serves as a model for other multinational corporations looking to navigate and thrive in diverse international markets.
