Starbucks is a rare star when many multinational companies are experiencing a downturn in China, and their business continues to grow strongly. “We have just embarked on the most powerful and attractive growth opportunity in Starbucks history – China.†Starbucks Global President and CEO Kevin Johnson invested in the first quarter of the 2018 fiscal year. The conference call said, "The US and Chinese markets are our two main drivers."
Starbucks' net income for the first quarter of fiscal 2018 (as of December 31, 2017) reached a record $6 billion, an increase of 6% year-on-year. In contrast, China's performance has grown strongly, with same-store sales growth of 6% in China and net income growth of 30%. In 2017, China/Asia Pacific contributed nearly 17% of revenue.
Every 15 hours, a Starbucks store opens in China. This is the Starbucks official description of the speed of expansion in China. In 1999, Starbucks opened the first store in mainland China at the Beijing International Trade Center. Today, there are already more than 3,000 stores. During the reporting period, Starbucks opened 700 new stores worldwide, opening 188 new stores in China and entering seven new cities. "There is no doubt that the number of Starbucks stores in the Chinese market will one day surpass the United States," said Kevin Johnson. The Chinese market has now grown to become the second largest market for Starbucks after the United States, and has been shunned by the board of directors to get rid of the reliance on the United States.
The same is the multinational catering giant, KFC's parent company chose to split Yum! China. And McDonald's China has completely become a "Golden Arch."
Who is spending Starbucks
There are three Starbucks in different sizes in the Galaxy SO-HO office building near Chaoyangmen in Beijing. The smallest store is located on the subway floor and is equipped with only 4 chairs and a bar. At 3 o'clock on the afternoon of January 31, the clerk was chatting and there was no one consumer. The largest store nearby is located in the center of Kaiheng. From the G-port of Chaoyangmen subway, you can see the iconic logo. Thanks to the customers of the adjacent Bank of China business hall and the nearby white-collar workers, there is almost no room at 3 pm.
The reporter and Hu Nan, who used to drink Starbucks, met at Starbucks (Kaiheng Center). He is the director of public relations at a startup company. In the past three years, Hu Nan has come to Starbucks almost every day to order a large cup of iced American coffee. Starbucks in the Kaiheng Center has been in operation for seven or eight years, and the best sales are latte, American, and caramel macchiato. Although it is not convenient to disclose the specific sales volume, it can be inferred from the description of the clerk that these coffee products have a double-digit sales volume per day. Tea is sold better in the summer.
There was no fruit in the search, but I had to go to the Starbucks store on the first floor of the Galaxy SOHO, which is only about 100 meters away from the store. The store opened only 3 months, and the working hours were slightly lower. The three employees I saw in the store, one of them joined Starbucks for more than half a year, and the other joined Starbucks four years ago, before working in the store at Nanluoguxiang.
The best selling in this store is latte, followed by American coffee, which is less than coffee, and Biluochun and lemon tea are the best-selling products in tea. TEAVANA is a Starbucks tea brand that officially entered the Chinese market in the summer of 2016.
A few months ago, a Starbucks in the Beijing South Railway Station area, employees seem to be unfamiliar with their menus when ordering and cashier.
Investor Zhang Chen (pseudonym) has been drinking Starbucks coffee almost every day for more than a decade. In 2003, Zhang Chen returned from the United Kingdom. At that time, China had not set off a large-scale coffee fever, and there were not many coffee shops. Starbucks has entered China for four years. Zhang Chen, who didn't have much choice, started a long trip to Starbucks.
"One or two cups a day." In ten years, Zhang Chen drank Starbucks coffee almost every day. "The advantage of Starbucks is that there will not be too many down-sides, and there will not be too much upside, except for individual stores. Outside. Just like you open Master Kong iced tea.†He also occasionally goes to Costa coffee, but he thinks that “Costa quality control is a bit unstable, and the taste difference between different stores is large, it is difficult for customers to form a fixed expectation.â€
Stable quality is also the reason why Hu Nan chose Starbucks. "Starbucks' American style will not be particularly bitter, nor will it have a particularly strong baking flavor, and the taste is what you expect, and there won't be much deviation." Hu Nan said that when the work pressure is high, he will sit and relax in the store for a while. Drink a cup of coffee to remind you of the working conditions in the afternoon.
At noon on February 1, college student Chen Xing (a pseudonym) walked into Starbucks (Beijing International Store) in Zhongguancun South Street, Beijing. This was his first time drinking Starbucks. After a long struggle, he ordered a medium cup of latte and French. Awkward.
Sitting on a high stool, Chen Xing took out his mobile phone and took a commemorative photo. "It feels better than the instant coffee that is rushed at school, haha." Just smiled and said a few times. He hasn't returned to his hometown after the holiday. After eating dinner nearby, he thought about coming in and spending time. He did not grab the Alipay 12 yuan coupon, he was a little lost. Later, he saw someone paying with the Star Card. He said, "I don't know, maybe I missed a chance."
Starbucks is turning itself into a way of life. In the past six months, Starbucks has opened a pet special store in Guangzhou and Shenzhen. There is a cute pet rest area outside the store. It also offers “Claw Buchinoâ€, a creamy drink that can be eaten by pets.
For many people, Starbucks' social and leisure attributes are the reason they often go. When people meet, don't know where to go, go to Starbucks, Starbucks has become an indispensable choice for meeting places. For a long time, Starbucks in the West District of Zhongguancun played such a role.
The Starbucks in Zhongguancun South Street is running at full capacity in the afternoon. Most consumers are alone, laptops or looking down at their mobile phones and drinking coffee from time to time. Li Hua (pseudonym), who came in with the computer, just received a new job assignment and hurriedly sat down to work as soon as he entered the door. Li Ming, who works nearby, said that he usually meets with customers here. If he is alone, he will come over for an afternoon tea. "I want to have a quiet place to eat today, but this time. There are a lot of people coming over." Starbucks left most of the time he left.
At midday, Starbucks in Zhongguancun South Street arranged a team of six or seven people from time to time. Many people began to look into the position when they were waiting in line or waiting for coffee. Some customers who seemed to have the desire to sit down did not find a suitable location and packed the belt directly. go.
Chinese speed
At Starbucks in Wudaokou, the clerk actively recommended downloading the registered Starbucks APP to consumers.
The mobile Internet has also written a lottery for Starbucks recruiting and retaining consumers in China. In December 2016, WeChat paid to land in Starbucks stores in mainland China. In September last year, Starbucks also connected to Alipay. Previously, Starbucks connected to the Starbucks Gift Card in its app to open mobile payments. In December 2015, Starbucks Tmall official flagship store officially opened as a digital extension of Starbucks' "third space." In February 2017, Starbucks and Tencent collaborated on WeChat to launch a new social gift experience “Use Starsâ€.
After accessing WeChat payment and Alipay, Starbucks mobile payment increased by 60%, and more than 6 million active Starcard users in 90 days. In the first quarter of the 2018 fiscal year, Starbucks China's online business and social gifts reached nearly $20 million, or about $126 million, a three-fold increase over the same period last year.
The expansion of the product line also made Starbucks China profitable. In March 2015, Starbucks partnered with Master Kong (0322.HK) to produce Starbucks ready-to-drink drinks in mainland China and expand distribution channels in the local market. Under the agreement, Starbucks is responsible for the development of coffee ingredients, branding and product innovation; while Master Kong is responsible for the production and sale of Starbucks ready-to-drink beverage products in mainland China.
At that time, the market cited by Starbucks was expected to have a market size of $6 billion in China's ready-to-drink coffee and functional beverages in 2015, and is expected to grow further by 20% in the next three years. Starbucks Chief Financial Officer Scott Maw said Starbucks has sold 30 million bottles of Frappuccino since its cooperation with Master Kong Holdings in the fifth quarter.
In the first quarter of the 2018 fiscal year, cold drinks accounted for nearly 40% of Starbucks beverage sales, and contributed half of the overall growth. Food accounts for one-fifth of its total income. Starbucks Chief Financial Officer Scott said that food prices will continue to rise in the second half of this year.
Ten years after drinking Starbucks coffee, Zhang Chen "suddenly did not love" Starbucks. After April 5, 2013, I have never bought a cup of Starbucks coffee. The reason for letting him give up Starbucks is that there are more and more coffees to choose from in the Chinese market. At the same time, he believes that "Starbucks' time and energy are spent on things other than coffee, such as image design, support for various social activities, etc. ."
In the past ten years, Starbucks Chinese stores have turned several times.
The current Starbucks China CEO Wang Jingwei joined Starbucks in January 2000. She was promoted to CEO in October 2016 and previously served as President of Starbucks China. Starbucks official information said that Wang Jingyi's biggest contribution is the expansion of Starbucks stores in China, from more than 400 stores in 2011 to more than 2,300 stores in the new appointment, an average of nearly 400 new ones per year.
At the same time, Cai Dejun, Vice President of Starbucks China Store Development and Design, was promoted to Starbucks China Chief Operating Officer. Cai Dejun joined Starbucks in 2012 and served as Chief Marketing Officer of Starbucks China and Vice President of North China. Starbucks said that during his tenure as vice president of store development and design, Cai Dejun led the team to promote the addition of 550 Starbucks stores, including Starbucks flagship store, specialty stores that fully display coffee elements, and 75 Starbucks selection stores and more than 380 handcuffs. Store.
After being promoted to a new position, Wang Jingyi will focus on the long-term development strategy of Starbucks' overall business and lead the expansion of innovative business in the Chinese market, mainly including digital and e-commerce business development. Cai Dejun will continue to explore and promote the development of Starbucks stores in China, innovate infrastructure, implement key operational systems, and lead food innovation.
Today, Zhang Chen is more willing to go to an independent boutique coffee shop "adventure." “There are many small shops in Shanghai, there is only one counter, and many people are really going to coffee.†In addition to fine coffee, Starbucks also faces other chain giant brands such as Costa, McDonald’s and other fast food chain brands as well as local “net black teaâ€. "The cross-border competition."
Chen Xing told the staff that he was not recommended to enjoy the card, saying that he might buy Zhang Xingxiang card in the future.
Running to 5,000 stores
Starbucks plans to open more than 5,000 stores in China by 2021.
Last December, Starbucks opened its bakery in Shanghai, the second baking workshop outside of Seattle, and the first fully immersive coffee experience store in Starbucks Asia. This workshop is located on Shanghai's busiest West Nanjing Road, one of the most prosperous business districts in the world.
In this workshop, Starbucks introduced Princi for the first time, which is an Italian high-end handmade baking and gourmet brand. Last November, Starbucks introduced a bake in the baking workshop in Seattle, where food sales increased dramatically. At the same time, Starbucks China's first Teavana bar was set up. For the first time, the Shanghai Baking Workshop offers more than 10 wines, including carefully selected niche wines and craft beers extracted from Starbucks coffee beans.
Wang Jingwei said that the baking workshop will become Starbucks' 'Innovation Lab', and we will promote the most popular innovative beverages to more coffee lovers through the nationwide selection of stores.
Zhang Chen passed the Shanghai Baking Workshop but did not enter. He also hopes that Starbucks will do the standard.
Hua Yi went to this workshop on a weekend. He was running "innovation". "I feel very noisy when I go in. It is a bit low-end. The business model innovation is obvious. I don't see product innovation. The degree of digitization is very common in China. Compared with the United States, (here) mobile payment is still very advanced." I spend six or seven hundred yuan a year in Starbucks drinking coffee.
Starbucks described the status of the workshop in an official report: Shanghai Baking Workshop is the epitome of Starbucks' innovation in China's coffee and retail industries.
Shanghai is indeed the top priority of Starbucks China, with more than 600 stores and half of the stores in the East China branch of Shanghai Starbucks.
This is also an important reason why Starbucks repurchased the remaining 50% stake in Shanghai Uni-Starbucks Coffee Co., Ltd. from the unified hands with about 1.3 billion U.S. dollars. Upon completion of the transaction, Starbucks acquired 100% ownership of approximately 1,300 stores in Jiangsu, Zhejiang and Shanghai. In mid-January, Shanghai Uni-Starbucks Coffee Co., Ltd. officially changed its name to Shanghai Starbucks Coffee Management Co., Ltd., and the senior management adjusted.
The bake workshop also brought a record of real money to Starbucks. On the first day of its opening, Shanghai Baking Workshop became the world's highest-selling Starbucks store, with an average turnover of more than twice that of Seattle stores, with a unit price of $29.
Howard Schultz, founder and chairman of Starbucks, said in an investor conference call that no one in Starbucks stores he has ever been able to compare with the Shanghai Baking Workshop. This store broke all the records in Starbucks history. He also released a set of data: the average Starbucks store in the United States has an average weekly income of $32,000, while the Shanghai Baking Workshop has only opened for eight weeks. The average daily revenue is twice the weekly revenue of the US store, which is about 40 yuan. Ten thousand yuan, the average customer price is $29.
Kevin Johnson, global CEO of Starbucks, said that the popularity of the baking at Shanghai Baking Workshop allowed him to see the business opportunities of bake, and tried to open a bakery, with baked bread and Starbucks. coffee. This will be the new growth point of the Starbucks Group's food sector. In the conference call, Starbucks revealed that it intends to open a bakery store in China.
Kevin Johnson analyzes Starbucks' opportunities in China in this way: In 2014, China's GDP was $11 trillion, and many economists expect China's GDP to exceed $15 trillion in 2021. By then, China’s middle class will rapidly expand and it is expected that the consumer population will reach 600 million, almost twice the total population of the United States. Starbucks plans a blueprint for 5,000 stores for the estimated 600 million Chinese consumers. “The results we saw at the Shanghai Baking Workshop not only gave us confidence, but also made us realize that the opportunities in the Chinese market are far greater than we thought a year ago,†Howard Schultz said.
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