Brian Niccol, Starbucks’ CEO, said the coffee chain is eyeing a major expansion into the Middle East and Chinese markets.
In a Friday interview with Bloomberg, Niccol said that the chain’s franchise operator in the Middle East, the Alshaya Group, will open 500 new stores in the region over the next five years. He said the opening of the new stores is projected to create 5,000 new jobs.
Niccol also talked about a large-scale expansion in China. He said the company is focused on how to get bigger in China “because the reality is, that market is going to continue to grow for us.”
“Today, we have over 7,000 stores. There will be many more thousands of stores in China in our future,” he added.
Niccol’s comments about building Starbucks’ presence in these two markets come after the brand saw losses in the Middle East last year, where it faced boycotts linked to the war in Gaza.
Starbucks’ finance chief said in an earnings call in April that comparable store sales outside the US fell 6% in the second quarter of 2024, largely because its Middle East business had taken a hit. Starbucks said on its website in 2023 that it had nearly 2,000 stores operated by the Alshaya Group in the Middle East and North Africa region.
“The boycott and that whole information cycle, it’s really unfortunate,” Niccol told Bloomberg.
“Because obviously, it hurts the brand, it hurts our partners in the stores, and the thing that’s really disappointing about it is, it’s just not based on anything that’s accurate or true, you know, we’ve never supported any militaries,” Niccol said.
The chain also faces an uphill battle in China.
The market has been flooded with offerings from budget local coffee chains like Luckin Coffee, Cotti Coffee, and KFC’s coffee wing, KCOFFEE. These chains are now competing with Starbucks for buy-in from China’s cost-conscious consumers.
Comparable store sales in Starbucks China decreased by 6% in the latest quarter, which ended on December 29.
Niccol’s vision for Starbucks
Niccol, who took the top job at Starbucks in September, has been making big changes at the company.
In October, he said he aimed to rebrand Starbucks as an inviting place for people to hang out.
Niccol said on the company’s January 28 earnings call that Starbucks would simplify its offerings. It would also work to reduce wait times by improving its mobile ordering process and testing a new algorithm for mobile orders.
On the earnings call, Niccol and Starbucks’ finance chief said the chain would cut 30% of its menu items to streamline service.
Representatives for Starbucks didn’t respond to a request for comment from Business Insider, sent outside regular business hours.
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