Starbucks is planning a massive expansion in China over the next couple years that will nearly double its locations in the country.
It might seem risky for a coffee company to expand so aggressively in a culture of tea-drinkers. But Starbucks has altered its stores and products to adapt to local tastes and the strategy appears to be working.
The company’s same-store sales grew 7% in the region for the most recent quarter and it’s planning to open 500 new locations in China by the end of the year, which would make China Starbucks’ second largest market outside the U.S.
Here’s a few ways that Starbucks is doing things differently in China:
1. The stores are bigger with more seating space. “Unlike Americans, who can’t cope without a morning cup of joe, most Chinese customers don’t just grab and go,” writes Violet Law in the Global Post. “Instead, coffee shops here are a destination. People sit back and chat with friends and family. Some come to meet with clients or do business.”
While most Starbucks stores in the U.S. are hectic and bustling, Chinese consumers seek out Starbucks to “nurse their drinks and lose themselves in their laptops… enjoying tranquility that’s usually elusive in teeming China,” Law writes.
2. The coffee is more expensive. Starbucks charges up to 20% more for its coffee products in China compared to other markets. The Chinese state media has attacked Starbucks for this practice, but the company says the prices are due to the higher costs of doing business in the country.
3. Starbucks stores in China offer a menu of Chinese teas and treats like mooncakes. But one of the best-selling item in the region right now is actually a Strawberry Cheesecake Frappucino, which is topped with a cream cheese whipped cream, graham cracker crumbles, and strawberry syrup. The frappuccino “set instant records for the top-selling limited-time Frappuccino offering ever,” Starbucks chief operating office Troy Alstead said on a recent earnings call.
4. The food is labelled with the country where it was imported from to address Chinese consumers’ concerns about food safety.
5. Starbucks management makes an effort to get to know employees’ families. “Starbucks has … factored in family dynamics and expectations in China, where success can be judged by the title on one’s business card,” the company said in a statement. “Family forums have been held for parents of store partners to hear managers discuss gratifying career paths at Starbucks.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.