Internet jokesters have taken advantage in the past. One "news" story trumpeted the building of a Starbucks on the international space station. A fake press release announced the grand opening of a new Starbucks in the washroom of another Starbucks. STARBUCKS CONTINUES TO EXPAND WORLDWIDE
Vancouver Sun, Author - M. de Bock August 2002
Is a Starbucks - or two - on every corner too much? Suggestions that the coffeehouse market has reached the saturation point are nothing new for the sector's undisputed leader.
Internet jokesters have taken advantage in the past. One "news" story trumpeted the building of a Starbucks on the international space station. A fake press release announced the grand opening of a new Starbucks in the washroom of another Starbucks.
But with every suggestion - joking or otherwise - that the chain is overextending itself, Starbucks has responded by expanding, becoming the fastest-growing takeout chain in the world.
The firm began in 1971 with a single-location coffee wholesale outlet in Seattle's Pike Place Market. Expansion began in 1987, including the company's first Vancouver store. Its growth ever since has followed a nearly exponential curve. Now, there are well over 100 stores in the Lower Mainland, including more than 20 in downtown Vancouver alone.
Morgan Stanley analyst Michael Sherrick has calculated a "saturation point" for Starbucks. He said the market can support slightly more than three Starbucks stores per 100,000 citizens. The U.S. national average today is approximately half that rate, but some cities have passed it long ago. Seattle, the company's home base, has almost 15 Starbucks per 100,000 citizens.
Vancouver is well behind Seattle, but still manages to nearly triple Sherrick's saturation point prediction. For every 100,000 people in the Lower Mainland, there are approximately 8.3 Starbucks locations. And the company isn't done yet. Launi Skinner, regional vice- president for Western Canada, said: "We continue to be excited with the growth opportunities in the Vancouver market."
Skinner also said Starbucks wants to "provide the third place atmosphere for customers," referring to the company's goal of being next in line, behind home and work, for coffee drinkers. It's a strategy that makes sense in this Canada. After all, in this country, more than 15 billion cups of coffee are consumed each year. That is an average of more than 1.3 cups per day per Canadian, almost half again as much, per capita, of what is consumed in the U.S. According to the Coffee Association of Canada, more than 67% of adult Canadians drink coffee every day.
But Canadians are not alone in choosing Starbucks. There are now more than 5,500 Starbucks worldwide in 36 different countries, including 889 stores that have opened already this fiscal year. The firm plans to expand to more than 10,000 locations in 60 countries by 2005. Greece and Mexico are scheduled to be added in 2002.
The company also recently boosted its long-term worldwide target to 25,000 stores, up from 20,000. With this exponential rate of growth, the coffee dollars continue to pour in. The company's third-quarter net income, announced in August 2002, rose 20 per cent to $56.2 million US. Sales rose 26 per cent to $835.2 million, including an eight-per-cent jump in same-store sales.