Starbucks says aims to triple China revenue by 2022

Starbucks Corp (SBUX.O) is looking to more than triple its revenue and almost double its store count in China over the next five years, doubling down on the market as traffic growth comes under pressure in the United States.

The U.S. coffee chain, which recently raised USD 7.15 billion in a deal with Nestle SA (NESN.S), aims to have 6,000 stores in the country by the end of 2022, it said in a statement. It has around 3,300 stores in 141 cities in China currently.

Starbucks dominates China’s coffee scene, although it is seeing more competition from smaller rivals, similar to how it is coming under pressure from a “third wave” of boutique coffee sellers and cheaper rivals in the United States.

In December, Starbucks opened its largest store in the world in Shanghai. Analysts expects store numbers in China would hit 10,000 within a decade, overtaking even the U.S. market. Starbucks expects to more than double its operating income in China over the next 5 years, relative to 2017.

It made USD 3.24 billion in China/Asia Pacific revenue in the past financial year while operating income was USD 764.8 million, according to calculations by Reuters. A breakdown for China alone was not immediately available.

This month Starbucks struck a deal with Nestle, the world’s largest food and Beverage Company, to give the Swiss firm exclusive rights to sell Starbucks’ packaged coffees and teas around the world.

Starbucks said the alliance with Nestle would help further extend the coffee chain’s reach and scale throughout China.

On a different note, Seattle’s largest businesses such as Inc. and Starbucks Corp. will have to pay a new tax to help fund homeless services and affordable housing under a measure approved by city leaders.

The City Council unanimously passed a compromise plan Monday that requires businesses making at least USD 20 million in gross revenue to pay a tax of about USD 275 per full-time worker per year — lower than the USD 500 per worker initially proposed. The “head tax” would raise roughly USD 48 million a year to build affordable housing units and provide emergency homeless services.