Steady Progress?! Starbucks Reports Increased Revenue and Net Profit in Q2 2023

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Starbucks Moves Closer to Its 2025 Strategic Vision for China

On May 3, coffee chain giant Starbucks announced its financial performance for the second quarter of fiscal year 2023 (January 2, 2023, to April 2, 2023). The financial report shows that Starbucks' consumer market is gradually accelerating its recovery, with Q2 comprehensive revenue reaching $8.716 billion, a 14% increase; net profit of $908 million, a year-over-year increase of 34.66%; and global same-store sales growth of 5%.

In the Chinese market, Starbucks achieved 3% net revenue growth, with nearly $800 million in revenue at the end of the quarter; same-store sales grew by 3%, and same-store transactions increased by 4%, marking the first positive same-store sales growth since the third quarter of fiscal year 2021, far exceeding market expectations.

Store Expansion and Growth

In terms of store growth, Starbucks China added 153 net new stores during the quarter, more than double the previous quarter, representing explosive growth. According to Narrow Door Restaurant Eye data, Starbucks China currently has over 7,017 stores across 32 provinces and 268 cities.

It's evident that the dual growth in revenue and net profit is closely related to Starbucks' store expansion. As the impact of the pandemic diminishes, businesses worldwide are returning to normal operations and achieving corresponding growth. In comparison, market customer traffic has experienced a "strong rebound"!!!

Leadership Perspectives and Future Outlook

According to multiple media reports, Starbucks China Chairman and CEO Wang Jingying stated: "The Chinese market has opened a new chapter, and the second quarter marks the beginning of a steady and comprehensive recovery for Starbucks China. In March, Starbucks China's same-store sales grew by 30%, and this growth momentum will continue in the upcoming third quarter. In the second half of this year and beyond, Starbucks China will drive revenue and profit growth while accelerating new store openings."

Notably, Starbucks previously outlined its China strategic vision at an investor conference, aiming to reach 9,000 total stores in China by 2025. It appears that Starbucks is indeed steadily advancing toward its goal of operating 9,000 stores in China by 2025!!!

More than a week before the financial report release, on April 23, Starbucks founder Howard Schultz, during a speech at Peking University's Guanghua School of Management, also expressed that the scale and potential opportunities of the Chinese market remain enormous. He stated: "I believe that one day, Starbucks China's business scale will eventually surpass the U.S. market, and the number of stores in China will exceed 10,000."

Competitive Landscape

According to the latest financial report from "old rival" Luckin Coffee earlier this month, both companies are showing positive trends. However, in terms of growth percentage, Starbucks' increase is much smaller than Luckin Coffee's. Luckin Coffee's first-quarter report shows single-quarter revenue of 4.44 billion yuan, a year-over-year increase of 84.5%; net profit of approximately 680 million yuan; and net addition of 1,137 stores, bringing the total to 9,351 stores.

Facing such a competitive coffee market and increasingly aggressive expansion plans, what measures will Starbucks take for the Chinese market? Let's wait and see!

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