Starbucks shares are trading near a 2-year low this morning, after a Q2 earnings report where revenues sank 2% and net income plummeted 15% — largely due to same-store sales, which dropped for the first time since 2020, particularly in China where the metric was down 11% year-on-year.
It turns out that Starbucks’ ability to sell coffee in China is almost as bad as its attempts to get your name right on their cups. Although, unlike baristas’ hurried efforts to scribble Ian or Ashlyn on the side of espresso vessels, no one can accuse the chain of not trying in the Chinese market…
Venti frustrations
Starbucks’ global expansion goals have been going full steam ahead in recent years, having reported plans to open the equivalent of 8 stores around the world every day until 2030, and China — with its affluent and increasingly caffeine-addicted middle class — has long been at the center of those growth efforts. However, it seems that the company’s famous green Siren still has a lot of work to do to entice Chinese customers away from local competitors like Luckin Coffee, which continues to go from strength to strength.
Despite adding a whopping 850 stores in the country since Q2 ‘23, not to mention a pork-flavored latte for Lunar New Year, Starbucks’ revenue in the region has been flatlining. In fact, if you look back 5 years, the company has nearly doubled its stores in the region. Sales over that time frame? Down 0.4%.
Even so, the chain still seems convinced that China will come around to the brand, with ambitions to hit 9,000 stores in the region by 2025.
Related reading: Starbucks’ untapped investing potential.
