Starbucks to Double Indonesian Stores; Boost Asian Presence - Analyst Blog

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Starbucks CorporationSBUX reportedly has plans to double its store count in Indonesia over the next five years to capitalize on the growing demand in the country.

At a business leadership event in Jakarta, Starbucks Indonesia Chief Operating Officer (COO) Anthony Cottan said that they have plans to double the store count to 400 from the current 200. The company will also focus on smaller format stores to cater to the on-the-go coffee drinkers.

The Starbucks brand is gaining popularity with consumers across Asia as the company is increasingly investing in the Asian markets. The relatively low per-capita consumption as well as the burgeoning middle class with rising income levels increase the demand for convenience food and beverages and promise significant growth potential.

The China and the Asia-Pacific (CAP) segment delivered 18 consecutive quarters of more than 20% revenue growth. Starbucks' CAP region is expected to drive much more meaningful business growth over the next five years backed by rapid unit growth, growing brand awareness, and increased usage of the mobile/loyalty platforms.

Starbucks plans to double the CAP store count to roughly 10,000 and triple the revenues of this segment to more than $3 billion by 2019.

In CAP, Starbucks' most important market is China. Starbucks' business in the country is rapidly growing due to innovative store designs, local product innovation and the success of MSR program.

Beyond China, the company is accelerating growth in countries like Japan, Korea and Thailand.

Starbucks also has a significant presence outside Asia-Pacific. It operates more than 500 stores in Latin American countries like Chile, Mexico, Argentina and Colombia.

Moreover, in the past two years, management has successfully turned around its Europe, Middle East and Africa (EMEA) business by improving customer experience, up-leveling product offerings and growing margins through process and supply chain efficiencies.

Stocks to Consider

Starbucks carries a Zacks Rank #3 (Hold). Some restaurateurs worth considering include Dave & Buster's Entertainment, Inc. PLAY , Cracker Barrel Old Country Store, Inc. CBRL and BJ's Restaurants, Inc. BJRI . All these stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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