NEW YORK — Another Starbucks may soon pop up around the corner, with the world's biggest coffee company planning to add at least 1,500 cafes in the U.S. over the next five years.
Starbucks said Wednesday that it plans to boost the number of locations in its biggest market by about 13 percent by 2017. In the broader Americas region, the company plans to add a total of 3,000 new cafes by that time.
Starbucks also is planning to expand overseas, particularly in China, which is expected to surpass Canada as Starbucks' second-biggest market in the next two years. By that time, Starbucks says it will have 20,000 stores globally, up from about 18,000.
The upbeat expansion plans mark a turnaround from Starbucks' struggles during the recession. After hitting a rough patch, the company brought back founder Howard Schultz as CEO in 2008 and embarked on a massive restructuring effort that included closing 10 percent of its U.S. stores.
Cliff Burrows, who heads Starbucks' domestic business, said the problem wasn't that Starbucks was oversaturated, but that the company hadn't been careful about its store openings. In the years leading up to the downturn, the company was opening well over 1,000 stores a year. That led to cafes in locations where signs or traffic might not be optimal, he said.
Burrows said Starbucks has gotten more sophisticated, and noted that the cafes opened in recent years are among the company's best performers. Sales at new cafes are averaging about $1 million a year, for example, above the company's target of $900,000. It costs about $450,000 to build a new cafe.
Since Starbucks already has a broad footprint, the company's expansion is intended to "deepen" its presence with additional stores in markets across the U.S., said Troy Alstead, Starbucks' chief financial officer. That means establishing stores – including drive-thrus and smaller cafes – in more convenient locations for customers. And even as it expands, Starbucks said it expects to maintain growth at cafes open at least a year. The figure, a key metric of health, has ranged between 7 percent and 8 percent globally in the past three years.
The continued U.S. sales growth will be fueled by the new products, such as Evolution premium juices and Via single-serve coffee packets. Looking forward, Starbucks is also looking to improve its food menu and is testing a new menu of baked goods from La Boulange, a small San Francisco-based chain it acquired earlier this year. The new croissants, loaf cakes and other items will spread to about 2,500 cafes next year and go national sometime in 2014, Burrows said. The company says only about a third of customers currently buy food with their drinks.
In a test aimed at building sales in the evening hours, the company also started serving beer and wine at about a dozen locations earlier this year, with food such as chicken skewers and dates wrapped in bacon.
And most recently, Starbucks announced plans to acquire Teavana, a chain that has 300 locations in shopping malls. When the announcement was made last month, Schultz said the company would "do for tea what it did for coffee."
That includes plans to expand Teavana's presence beyond the shopping mall with stand-alone shops that have "tea bars" that serve specialty drinks. The company declined to say when Starbucks cafes would begin serving Teavana drinks – and it hasn't decided on whether it will continue to sell Tazo in cafes.
After a string of acquisitions in recent years to build on its core business, Schultz indicated Wednesday that the company would hold off on any additional purchases in the near future, noting that the company has "enough to handle."
To build its packaged-goods business, Starbucks plans to let customers earn points on their My Starbucks loyalty card starting next year when they purchase Starbucks bagged coffees in supermarkets and other outlets. Customers currently earn points only when they make purchases in Starbucks stores.
The picture isn't rosy around the globe, however. Europe remains a sore spot for Starbucks, with a key sales figure falling in the region 1 percent during the latest quarter. In an effort to boost results, the company has been closing underperforming stores and licensing of some of its cafes in the region.
In the United Kingdom, Starbucks is also embroiled in a row over its taxes. The company has been doing business in Britain for 15 years and has 700 outlets but it has yet to record a profit – and therefore pay any taxes.
Starbucks says this is due to a complex process where its taxable profits in the U.K. are calculated after royalties paid to its European headquarters in the Netherlands have been deducted.
Following criticism in the U.K. parliament and a campaign by protest group U.K. Uncut, Starbucks said this week that it was reviewing its tax approach.
AP reporters Jill Lawless and David Stringer contributed to this report from London
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Coffee By Design
Sixteen years ago <a href="http://www.coffeebydesign.com/" style="font-size: 17px; font-weight: bold; " target="_blank">Mary Allen Lindemann and Alan Spear</a> opened this tiny coffee shop in Portland, Maine with the idea of building a place for the community. Over the years, the shop has grown from their original Congress Street location to three other shops and a micro roaster where they process all their beans. But despite their mini-expansion, the independent store remains homey and popular for Mainers as they continue to serve the community one cup of Fore Street coffee at a time. <strong>[Also see: <a href="http://blog.zagat.com/2012/05/best-barbecue-restaurants-in-10-us.html" target="_blank">The Best BBQ Restaurants in 10 U.S. Cities</a>]</strong>
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Seattle has always held the reputation of being the coffee king, so picking one of their numerous cafes wasn't easy. <a href="http://www.espressovivace.com/" target="_blank">Espresso Vivace</a> was chosen for its rich history in the Seattle scene, and for their rich Northern Italian espresso. Since 1988, owners David Schomer and Geneva Sullivan have made the art of espresso their life and have delved into roasting, pulling, preparing, pouring and grinding for the perfect shot. Each of their three locations remain unique too, one is a sidewalk bar, another a European style café and the third a more modern coffee shop featuring a cool design. <strong>[Also see: <a href="http://blog.zagat.com/2012/05/craziest-thing-ive-ever-eaten-epic.html" target="_blank">The Craziest Thing I've Even Eaten: Epic Tales of Bizarre Meals</a>]</strong>
Firestorm Cafe And Books
Coffee shops have often been associated with poets, activists, college students and any artistic type looking for a caffeinated connection. And, given that the <a href="http://www.firestormcafe.com/" target="_blank">patron saint of Firestorm </a>is writer and feminist Voltairine de Cleyre, this stereotype fits perfectly with this café in Asheville, NC, and not in a bad way. The cafe opened in 2005 with the goal to be worker-owned, and for the past six years, they have achieved that goal while also using Counter Culture Coffee to make a mean cup of joe. <strong>Also see: <a href="http://www.zagat.com/buzz/8-things-you-can-do-to-make-your-server-hate-you-0" target="_blank">8 Things You Can Do To Make Your Server Hate You</a></strong>
The artistic aura that Austin puts out has been drawing people in for decades and, like any good, creative-minded person, they need caffeine. <a href="http://flipnotics.com/" target="_blank">At Flipnotics</a> they get that and for the past 19 years this quirky café has served the needs of musicians and artists with cups of steaming Fair Trade organic coffee and by hosting live bands. Also, while the shop remains laid back, that doesn't mean the baristas are lazy, in fact, the coffee mavens here make some of the best lattes and cappuccinos out West. <strong>Also see: <a href="http://www.zagat.com/buzz/the-10-most-annoying-restaurant-trends" target="_blank">The 10 Most Annoying Restaurant Trends</a></strong>
As independent coffee shops started closing up in Denver after the corporate coffee boom, <a href="http://www.pabloscoffee.com/" target="_blank">Pablos has remained strong</a> since 1995. Owner Craig Conner first catered to the theater crowd at his original location next to the Denver Performing Arts Center. Now the shop has moved and taken root in the historic Alamo Placita neighborhood and not only serves up quality cappuccinos, lattes and café solo, but they roast their own beans daily. Aside from keeping the community caffeinated, they also host an annual pancake brunch extravaganza for their customers. <strong>[Also see: <a href="http://blog.zagat.com/2012/05/10-high-end-bbq-spots-around-us.html" target="_blank">10 High-End BBQ Spots From Around the U.S.</a>]
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Customers flock to this <a href="http://www.facebook.com/PressCoffeeBarDYT" target="_blank">Dayton, Ohio coffee shop </a>for a number of reasons: One, they hire skilled baristas to make outstanding drinks; two, the beans they use change constantly to keep things fresh; and three, they don't cater to the masses with silly drinks like the frappuccino (because really, that's not coffee). They use beans mainly from Counter Culture and newcomer Dogwood, and the shop sports numerous plugs for those hard at work freelancers, and of course, they also hang local art on the walls. All of this adding up to the perfect indy coffee shop. <strong>[Also see: <a href="http://blog.zagat.com/2012/04/cheap-eats-5-crazy-restaurant.html" target="_blank">Cheap Eats: 5 Crazy Restaurant Promotions</a>]
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It appears that most great coffee shops have started roasting their own beans and this rings true for this <a href="http://www.starloungecoffee.com/" target="_blank">Chicago hot spot</a>. In 2008 they started firing up their DarkMatter [sic] brew to sell in the quaint shop and quickly fanfare followed. Not only that, but by sourcing independent purveyors, Star Lounge also makes a huge effort to support small businesses like their own, giving customers another reason besides the drinks to feel warm and fuzzy. <strong>[Also see: <a href="http://blog.zagat.com/2012/06/8-wackiest-bbq-commercials.html" target="_blank">The 8 Wackiest BBQ Commercials</a>]</strong>