Lingerers at Starbucks don't even buy coffee and slow sales growth!
Starbucks 'to go' is a rare sight in China Image: Satbir |
Global coffee giant Starbucks Corp has encountered a rather unusual problem in China: loiterers. When Starbucks entered China in 1999, they were catering almost exclusively to tourists and expats; it even has a store within the iconic Forbidden City in Beijing until 2007.
Now the focus has shifted to young, wealthy Chinese who see the coffee shops as popular hangout spots in which to meet friends. Often, these customers do not see the need to buy the expensive coffees, which cost the equivalent of 1.6hrs work to the average Chinese worker, simply bringing in their own cheap food and drink to consumer in-store.
Stores in China are still reporting relatively low revenues compared to their American counterparts. In the States, customers are much more likely to buy a coffee 'to go', whereas Chinese consumers are much more likely to spend a few hours draining one cup of coffee, chatting to friends, surfing the net and socialising, resulting in slower turnaround and lukewarm sales.
In China, the company now has 570 stores across 48 cities in an attempt to garner a piece of the growing Chinese food and beverage market. Starbucks' bean-counters estimate there will be over 1,500 stores in 70 cities nationwide by 2015, although this still pales into insignificance against America's 10,800 cafes which bring in revenues upwards of $8 billion.
Fellow global mega-corp, McDonalds, has approached this problem in a very different way. In fact, the international burger baron has embraced the loiterers and frequently hold English corners, community meetings and study groups; a student catching forty winks between classes is a familiar image in China. Indeed, McDonalds has redefined its image in China as a trendy coffee hangout, providing free wifi and replacing the hard metal seats with comfy chairs.