Starbucks now has more locations in the US than McDonald's, but it's still not America's biggest chain

StarbucksStarbucks is now bigger than McDonald’s in the US.
  • Starbucks now has more locations in the United States than McDonald’s.
  • However, the largest chain in American remains Subway, with more than 25,800 sandwich shops across the country.
  • Subway’s recent struggles and store closures could serve as a cautionary tale for Starbucks as it continues to expand.

Starbucks’ growth has finally outpaced McDonald’s – but the coffee giant is still dwarfed by another chain.

Starbucks’ nearly 14,300 locations means that it now has more locations than McDonald’s, which has roughly 14,000 restaurants in the United States, The Wall Street Journal reported on Thursday. According to The Journal, Starbucks opened about 2,000 new locations in the US over the last three years.

While 2,000 new coffee shops in three years is impressive growth – for reference, Chipotle has a total of about 2,400 restaurants across the country – Starbucks still isn’t the largest chain in America.

That would be Subway, which has more than 25,800 US locations. That’s right – the sandwich chain has almost as many stores across America as Starbucks and McDonald’s combined.

However, that store count is dropping fast.

SubwayJoe Raedle/Getty ImagesSubway.

Subway’s US store count fell by 909 in 2017, losing almost three times as many locations as it did the year before. The sandwich chain told Bloomberg earlier this year that it planned to close about 500 of its US locations in 2018, based on projections.

Subway’s recent struggles could serve as a cautionary tale for Starbucks as it expands.

Starbucks has been plagued by analyst concerns that the chain has too many locations and could be cannibalising sales.

Earlier in 2018, Bernstein analyst Sara Senatore said in a note to investors that the company’s struggles in the US could be attributed to “excess unit growth, at a time when Starbucks is reaching a more mature stage of growth.”

In August 2017, BMO Capital Markets downgraded Starbucks shares to “market perform” partly because of concerns that there are simply too many locations in the US for the chain to continue to increase same-store sales.

“Cannibalization of existing store traffic appears to have accelerated over the last several years, which may create challenges in re-accelerating US comp momentum and could require a slowdown in the new store development pace,” the analyst, Andrew Strelzik, wrote in a note.

Starbucks has disputed the analysts’ arguments, citing the new stores’ impressive financial performance. Executives have said that the chain will continue to avoid oversaturation of the market by opening a wider range of stores, from more upscale Reserve locations to drive-thrus, which currently make up 80% of new Starbucks locations.

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