Starbucks sales growth to be steady despite deals

BENGALURU • Starbucks said on Thursday it was partnering Uber Eats for delivery from about 3,500 US stores and would nearly double its outlets in China over the next four years, but forecasts that same-store sales would remain steady, sending shares down 3 per cent.

The firm said it expects global same-store sales growth of between 3 per cent and 4 per cent annually in the long term, roughly in line with a forecast that estimates sales growth to be at the lower end of 3 per cent to 5 per cent this year.

Starbucks has been struggling to draw diners to its restaurants as it faces severe competition from smaller coffee chains that offer exotic coffees as well as fresh food.

In its attempt to withstand competition, the Seattle-based chain that owns about 14,000 restaurants in the United States has been revamping its owned and licensed businesses, improving delivery, closing Teavana stores, laying off workers and adding new items to its menu.

The latest delivery initiative, which will commence from the beginning of next year, builds on a pilot programme launched in Miami in September, the company said.

Starbucks said last month it was partnering with Uber Eats to deliver coffee and food in Tokyo, as part of its plan to boost sales in Japan, one of its major Asia-Pacific markets.

Starbucks also said on Thursday it would raise its store footprint in China, its fastest-growing market, to 6,000 stores across 230 cities over the next four years, up from 3,600 stores in 150 cities.

Starbucks partnered with Alibaba Group Holding earlier this year to deliver food and coffee in China, as it looks to compete with local coffee chains.

The world's biggest coffee chain's shares were down 3 per cent at US$64.84 in after-hours trading.

REUTERS

A version of this article appeared in the print edition of The Straits Times on December 15, 2018, with the headline 'Starbucks sales growth to be steady despite deals'. Print Edition | Subscribe