On January 31st, Starbucks announced its performance for the first quarter of fiscal year 2024 (ending on December 31, 2023). According to the financial report, the net revenue in the Chinese market for the first quarter reached $735 million, a year-on-year growth of 20% (excluding the impact of exchange rate fluctuations); same-store sales increased by 10%, and same-store transaction volume increased by 21%.
Starbucks China Chairman and CEO, Belinda Wong, reiterated that Starbucks has no intention to participate in a price war. She stated, “We are focused on achieving high-quality, profitable, and sustainable growth. Our goal is always to be the best and number one in this market.”
The established digital businesses (Starbucks Delivers and Starbucks Now) continue to maintain their growth momentum. In the first quarter, Starbucks China’s digital business accounted for 52% of total sales, reaching a historical high and growing by 4% compared to the previous quarter. The frequency of Gold members’ consumption increased by nearly 10% from the previous quarter. Member sales accounted for 73%, showing an increase.
In terms of store expansion, Starbucks China added a net total of 169 stores in the first quarter, entering 28 new county-level markets and bringing the total number of stores to 6,975. This year marks Starbucks’ 25th anniversary in China, and as of now, the number of Starbucks stores in mainland China has exceeded 7,000.
Starbucks China continues to make efforts in new product development, launching a total of 12 brand-new coffee beverages in the first quarter, including the popular Espresso Shot series and the Red Cup holiday special drinks.
Starbucks CEO Laxman Narasimhan emphasized three key elements of the China strategy. The first is localized coffee products and innovative customer experiences, which means providing more coffee product innovations that are relevant to the local market. By collaborating with opinion leaders and stakeholders, increasing social media interaction, and subsequently enhancing product awareness and customer frequency of consumption.
The “Intense” series of beverages, launched in October last year, is a brand new product developed by the Chinese team and first released in the Chinese market. It is a prominent manifestation of Starbucks’ localization strategy in China. The “Golden Roast Intense” series, launched on January 3rd this year, is the latest example of Starbucks China’s accelerated localization innovation.
The second is continuous technological and digital investment, and the third is to explore more untapped markets, that is, to accelerate the pace of market penetration and open more new stores in China’s counties.
Laxman Narasimhan said, “Currently, Starbucks has surpassed 7,000 stores in the mainland Chinese market and has built a robust business structure in China. It is expected to achieve the development goal of opening 9,000 stores by 2025. We are confident in continuing to be the leader in China’s high-end coffee market.”
From a global market perspective, in the first quarter of fiscal year 2024, Starbucks’ same-store sales increased by 5%, same-store transactions increased by 3%, and average ticket price increased by 2%. Overall net revenue grew by 8% to reach a record-breaking $9.4 billion (excluding the impact of exchange rate fluctuations).