SEATTLE, Wa. – Is there such thing as too much Starbucks coffee? That’s a question some analysts are asking as Starbucks Corp.’s U.S. locations come close to 14,300—more than the number of McDonald’s locations, the Wall Street Journal reports. Starbucks has opened 2,000-plus new U.S. locations in the past three years.
“The U.S. coffee market is becoming over-stored, and traffic is hard to come by. There’s a lot of competition out there,” said John Zolidis, president of Quo Vadis Capital. “If they continue to open at the same rate, the impact of cannibalization will intensify.”
Starbucks has struggled lately, with slowing afternoon traffic and a negative incident when two African American men were arrested in April at a Philadelphia store while waiting for a friend. The chain consistently had posted quarterly same-store sales increases of 5% or greater in the United States, but in 2016, sales started slipping. In April, Starbucks revealed that U.S. store traffic remained flat in the second quarter, while same-store sales at U.S. units increased 2% from higher basket rings.
Howard Schultz, who recently announced his retirement as executive chairman, has pushed for new stores, particularly high-end cafés such as Roastery and Reserve stores, as a way to grow the business. Given his upcoming departure, Sara Senatore, an analyst at Sanford Bernstein, said that the company may rethink store openings. Last month, Starbucks told investors it would continue on a path to open 2,300 net new stores worldwide in fiscal 2018.
Article Republished from NACS