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A Starbucks store on the Embarcadero in San Francisco. (AP Photo / Eric Risberg, File)
Starbucks (NASDAQ: SBUX) opened 20 years after its establishment in Europe, a Starbucks Reserve roaster in Milan, its first store in Italy. In the meantime, it has more than 3,100 stores in 40 countries in Europe, the Middle East and Africa. Its Milan store, for its part, marks the first time that the company has started its activities in a country in Roastery format, only two of which are present in Seattle, where is its headquarters, and in Shanghai. The company also announced plans to open new cafés with partner Percassi in early 2018. The country presents a unique challenge for Starbucks, with coffee growing very different from most other countries.
We have a price estimate of $ 59 for Starbucks, which is higher than the current market price. The graphics were made with the help of our new interactive platform. You can click here for our interactive dashboard on our outlook for Starbucks in 2018 modify different drivers and see their impact on EPS and price estimates for Starbucks.
Starbucks' goal is to raise its brand
Starbucks, without a doubt, expects a lot of its roasters, which should generate an average expenditure per customer. Its Seattle Roastery, which opened in 2014, continues to show double-digit growth. In December 2017, on its first day of operation, the Shanghai Roastery became the most profitable Starbucks store in the world, representing on average more than double the number of transactions of its counterpart in Seattle and an average ticket of $ 29. . During its second-quarter conference call (ending March 2018), management indicated that customer traffic continued to exceed expectations and that the average ticket was three times higher than a typical Starbucks China store. In response to the exceptional performance of its roasters, the company has decided to open additional stores with this concept: Milan, New York (scheduled to open in November), and one in Tokyo and Chicago in 2019.
The Italian puzzle
While a typical Starbucks coffee would cost around $ 2, the starting price for a cup of coffee at the Roastery is double, with prices ranging up to $ 10 to $ 12. Even an espresso, which would cost just over $ 1 in an ordinary Italian coffee, would be sold double. Starbucks coffee, made with an abundance of milk, is also not the type of coffee that most residents would choose. The typical Italians also drink their coffee quickly in a bar, while it is the tourists who occupy the tables most of the time. Given all of these cultural differences, Starbucks focuses on local preferences excluding frappuccinos and focusing on espresso, ice cream and pizzas. The company also hopes that its cocktail bar will attract customers. Although it is very risky to enter the country, where it has to compete with more than 57,000 other cafes, the store can do well with young Italians because the company is a big fan of creating cafes where clients are encouraged to work and socialize. The place can also be popular with tourists. Although it is unthinkable at this time, given the success of Domino's Pizza in Italy, Starbucks may well manage there.
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A Starbucks store on the Embarcadero in San Francisco. (AP Photo / Eric Risberg, File)
Starbucks (NASDAQ: SBUX) opened 20 years after its establishment in Europe, a Starbucks Reserve roaster in Milan, its first store in Italy. In the meantime, it has more than 3,100 stores in 40 countries in Europe, the Middle East and Africa. Its Milan store, for its part, marks the first time that the company has started its activities in a country in Roastery format, only two of which are present in Seattle, where is its headquarters, and in Shanghai. The company also announced plans to open new cafés with partner Percassi in early 2018. The country presents a unique challenge for Starbucks, with coffee growing very different from most other countries.
We have a price estimate of $ 59 for Starbucks, which is higher than the current market price. The graphics were made with the help of our new interactive platform. You can click here for our interactive dashboard on our outlook for Starbucks in 2018 modify different drivers and see their impact on EPS and price estimates for Starbucks.
Starbucks' goal is to raise its brand
Starbucks, without a doubt, expects a lot of its roasters, which should generate an average expenditure per customer. Its Seattle Roastery, which opened in 2014, continues to show double-digit growth. In December 2017, on its first day of operation, the Shanghai Roastery became the most profitable Starbucks store in the world, representing on average more than double the number of transactions of its counterpart in Seattle and an average ticket of $ 29. . During its second-quarter conference call (ending March 2018), management indicated that customer traffic continued to exceed expectations and that the average ticket was three times higher than a typical Starbucks China store. In response to the exceptional performance of its roasters, the company has decided to open additional stores with this concept: Milan, New York (scheduled to open in November), and one in Tokyo and Chicago in 2019.
The Italian puzzle
While a typical Starbucks coffee would cost around $ 2, the starting price for a cup of coffee at the Roastery is double, with prices ranging up to $ 10 to $ 12. Even an espresso, which would cost just over $ 1 in an ordinary Italian coffee, would be sold double. Starbucks coffee, made with an abundance of milk, is also not the type of coffee that most residents would choose. The typical Italians also drink their coffee quickly in a bar, while it is the tourists who occupy the tables most of the time. Given all of these cultural differences, Starbucks focuses on local preferences excluding frappuccinos and focusing on espresso, ice cream and pizzas. The company also hopes that its cocktail bar will attract customers. Although it is very risky to enter the country, where it has to compete with more than 57,000 other cafes, the store can do well with young Italians because the company is a big fan of creating cafes where clients are encouraged to work and socialize. The place can also be popular with tourists. Although it is unthinkable at this time, given the success of Domino's Pizza in Italy, Starbucks may well manage there.
What is behind Trefis? See how this optimizes collaboration and ifs
For Financial Directors and Financial Teams | Product, R & D and Marketing Teams
More search Trefis
Do you like our cards? Explore examples of interactive dashboards and create your own.
