This is an English adaptation of a FoodBud historical article originally published on January 30, 2024.
On January 30, Starbucks released results for the first quarter of fiscal 2024, covering the quarter ended December 31, 2023. Global revenue for the quarter was US$9.43 billion. Starbucks opened a net 549 new stores, bringing its global store count to 38,587.
In China, quarterly revenue was US$735 million, or about RMB 5.26 billion. By the end of 2023, Starbucks China had 6,975 stores. The original headline misstated the store count as above 9,000; the article notes that the correct figure was around 7,000 stores at that time.
For the full year 2023, Starbucks China generated US$3.16 billion in revenue, or about RMB 22.6 billion.
For the fourth quarter of 2023:
Luckin Coffee had not yet released fourth-quarter 2023 results when the article was written. Based on Luckin’s first three quarters of 2023, with revenue of RMB 17.8 billion, the article expected Luckin’s full-year revenue to exceed Starbucks China’s.
The article highlighted three China-related themes from Starbucks’ earnings call:
Belinda Wong, chairwoman and CEO of Starbucks China, attributed the lower average ticket partly to slower sales of higher-priced products, as consumers became more cautious about spending. She also pointed to Starbucks’ experimentation with promotional and pricing tactics.
The article describes this as similar to revenue management in airlines and hotels. Starbucks’ internal Deep Brew system is used to match the right price to the right customer at the right time, with the goal of maximizing revenue.
Starbucks executives continued to frame China as a large long-term opportunity. The company’s repeated strategic priorities were:
Wong’s recurring explanation has focused on China’s nearly 3,000 county-level-and-above cities: how many Starbucks has entered, how many remain open for expansion, and how the store base could grow over time. One stated target was to reach 9,000 stores in China by 2025.
Wong also emphasized that Starbucks did not intend to participate in a price war.
The article argues that discounting from Luckin and Cotti was affecting not only smaller coffee chains and independent cafés, but also consumers’ overall perception of coffee pricing in China. Whether Starbucks can sustain premium pricing through its positioning around store environment and experience, while avoiding the price war, would require more time to judge.
Note: Forward-looking store targets and market expectations in this article are historical figures from January 2024.
