Euromonitor International examines 'The Starbucks Approach' in China's foodservice sector.
For years, China’s double-digit economic growth attracted global operators in all industries, including foodservice, looking to meet a seemingly insatiable demand for foreign goods and concepts. China’s economy is slowing, however, which means that the“anything wins” approach to foodservice, from the perspective of global foodservice operators, is no longer as effective. China’s slowing economy is a sign of market maturity, and as the market matures, so have consumer preferences. Things like healthy eating, foodservice quality and brand engagement are increasingly important to consumers that have more choices than ever, which begs the question of what it is Chinese consumers expect from a global foodservice chain, and how is that changing?
While some of the market’s legacy global foodservice companies, such as McDonald’s and YUM! Brands, have struggled to adapt, a point evidenced by sluggish sales and recent, massive operational restructuring, not all global operators have struggled. Starbucks, which first entered the market in 1999, has nearly single-handedly pioneered a new wave coffee shop culture in China and has managed to sustain double-digit growth by both outlets and value. In addition to the 1,957 outlets currently in the market, Starbucks is expected to open an additional 500 stores each year for the next five years to more than double its stores by 2021.
Starbucks’ rapid expansion is not reliant on a budding demand for coffee, but instead by a service that consumers in China increasingly want. Starbucks’ specialist coffee shop format offers reprieve from consumers’ increasingly urbanised lifestyles; its premium-oriented menu offerings are tailored to the subtle, but important, differences in regional taste preferences; and Starbucks has tapped into a complex, and wholly unique, digital landscape that can be difficult to penetrate for a non-Chinese operator, making the Starbucks brand more relevant. Starbucks’ unique package of global foodservice in China, and the company’s ability to find growth amidst greater economic slowdown, should serve as a model for global operators moving forward.
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