Starbucks Eyes Midwest, Suburbs as Growth Opportunities

The new CEO also sees the lunch daypart as key to increasing sales.

April 05, 2017

SEATTLE – Incoming Starbucks CEO Kevin Johnson, who officially starts on Monday, has plans for growing the chain in the Midwest and suburbs, the Wall Street Journal reports. For several years, Starbucks had posted rising quarterly same-store sales of 5% or more, but last year, the coffeehouse chain started faltering. A snafu earlier this year with its mobile-ordering app creating the very congestion it was trying to reduce and contributed to sagging sales, according to Starbucks.

Johnson said he will focus on lunch to bolster sales. “We already have a significant number of customers coming to Starbucks at lunch for a beverage. Our thought is, if we have fresh food that pairs well with the beverages customers are buying at lunch, we’ll sell more food items at lunch,” he said. The company is launching a new lunch menu featuring fresh-made foods.

Johnson also said that growth opportunities in the United States would likely be “less urban places, more suburban areas, the Midwest. Over the next five years, we’ve projected building 12,000 additional stores globally, taking us to 37,000 stores. More than half of those stores will be in the U.S. and China.”

While Johnson said he doesn’t plan on speaking out on social issues as much as his predecessor, Howard Schultz, had done, he does think there’s more to Starbucks than good cup of coffee. “One of the reasons people come to work at Starbucks is because we stand for something. It’s about human connection and having a sense of humanity. We think that’s part of what makes Starbucks a special place that both partners and customers want to be associated with.”

Starbucks continues to test new ideas, such as its mobile-only store within its headquarters office, having Amazon’s Alexa order coffee and selling ice cream at select stores.

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