Starbucks has moved into the Chinese market, and they are experiences growing pains as they do so. While Chief Executive Howard Schultz expects that their mainland China sales will overtake those in Canada by 2014, they are experiencing some early hurdles. Starbucks China is finding that customers linger in cafes without purchasing anything for hours.
In addition, with the lower income levels in China, sale volumes have been much smaller than those in the United States. Chinese customers have been known to bring their own food to the Starbucks stores and to use the facilities to have meetings and to browse the internet.
Starbucks first came to China in 1999 and it now has over 570 stores in 48 cities. They plan, by 2015 to have 1500 stores in 70 plus cities.
The stumbling blocks, however, are plentiful. Chinese incomes are much lower than American salaries and Chinese people don’t inherently have a coffee habit. As a comparison, Starbucks booking sales were $358 million for mainland China in 1020, while they were $8 billion in the United States that year.
As reported by Bernstein Research analyst Sara Senatore, it would take a Chinese worker 1.3 hours of work in order to afford a 12 ounce caramel macchiato. CEO Schultz said that income has not, however, been a barrier to their growth.
Starbucks has also had trouble finding employees with skills, and they have announced plans to launch a training program called Starbucks China University next year.