Since November 6, Starbucks China has raised the price of some drinks slightly. For example, the price of a large cup (Grande cup type) American coffee is raised from 27 yuan to 28 yuan, and the cost of a medium cup (Tall cup type) latte coffee has also changed from 28 yuan to 29 yuan.
This price adjustment involves all of the offline stores in Starbucks, as well as the Starbucks dedicated star delivery service that is currently expanding across the country.
In response, Starbucks responded to domestic media that the price increase was slightly more than two and a half years after the last time. It was Starbucks's work on rent, logistics, store facilities, manpower, product development and customer experience innovation. Carefully evaluated and comprehensively considered.
Has raised prices in the US market
The Daily Economics reporter noted that Starbucks had previously implemented a price increase strategy in the US market.
Starbucks recently released its fourth quarter of 2018 (corresponding to the third quarter of the natural year 2018), showing a record $6.3 billion in revenue during the reporting period, an 11% increase from the $5.7 billion in the same period last year. Same-store sales in the US market grew by 4%, exceeding market expectations of 2%-3%, driving the company's global same-store sales growth during the reporting period. Same-store sales in China/Asia Pacific markets increased by 1% year-on-year, a significant increase from -2% in the previous quarter, with same-store sales in China increasing by 2% year-on-year. On the day after the above earnings report, Starbucks shares rose 9% after the US stock market.
According to some reports, the increase in Starbucks in the US domestic market during the reporting period was mainly due to the company's increase in the average price of its products by 5%. It should be noted that during the reporting period, Starbucks' sales in the US market fell by 1%. .
Image source: Starbucks Financial Report
In addition to Starbucks, companies such as Nestlé, Unilever and Procter & Gamble also disclosed in the latest earnings report that product price increases have eased the pressure of rising costs to a certain extent and promoted performance growth.
Future performance growth depends on opening a store
Recently, John Culver, president of Starbucks International Group's channel development and global coffee and tea division, said at the performance meeting that Starbucks' revenue in the Chinese market grew “very strong” by 21% in FY18.
Culver also said that most of the growth in the Chinese market during the reporting period was driven by new stores, so Starbucks will focus on the speed of opening stores in China. The data shows that in FY 2018 (corresponding to October 30, 2017 to November 1, 2018), Starbucks opened a total of 585 stores in the Chinese market and entered 17 new cities. In the fourth quarter of 2018, Starbucks opened 139 new stores and entered five new cities. At present, Starbucks has more than 3,500 stores in 148 cities in mainland China.
The Daily Economics reporter also noted that in May this year, Starbucks said at the investor conference held in China that by the end of the 2022 fiscal year, the number of stores in mainland China will reach 6,000, and new ones will enter 100 cities with a total coverage of 230. In each city, the number of new stores will increase to 600 each year. Starbucks has said that it is expected that in 10 years, China will surpass the United States and become the company's largest market in the world.
The official Starbucks expansion rate in China is described as follows: Every 15 hours, a Starbucks store opens in China.
Starbucks prepares to launch takeaway service in the US
Earlier, Starbucks’ third-quarter earnings report for 2018 showed that operating margins fell 7.6 percentage points to 19% in the China/Asia Pacific market, which has been high hopes. This is the first time Starbucks has been operating in China/Asia Pacific for the past nine years. The rate has fallen. In addition, during the financial period, Starbucks China store sales in the same store fell 2% year-on-year, in stark contrast to the 7% increase in the same period last year.
In this context, in early August, Starbucks and Alibaba cooperated to launch a delivery service to implement the concept of “new retail” to expand the market size in China. The successful experience in China has also affected its cooperation with third parties in the United States to begin testing delivery services.
For Starbucks' cooperation with Alibaba, Starbucks CEO and President Kevin Johnson said in an interview in Shanghai recently that China's innovation is faster than anywhere else in the world. Johnson pointed out that in the future Starbucks will use the company's take-out method in China to apply it to other parts of the world, including the United States.
DigiDay quoted Moody's senior credit officer Bill Fache as saying that, like other retailers, Starbucks is trying to work with third-party suppliers to provide delivery services to assess efficiency and cost-effectiveness.
(Article source: Daily Economic News)