By Julie Jargon
Starbucks Corp. aims to double sales from its food business in
the U.S. over the next five years and become more of an evening
food-and-wine destination as it continues its push to be more than
just a coffee chain.
The Seattle-based chain known for its java in recent years has
removed the word "coffee" from its logo and expanded food beyond
its traditional breakfast pastries. During an investor conference
on Thursday in which the company is expected to lay out its growth
strategies for the next five years, Starbucks plans to announce a
target for annual revenue from food in the U.S. market to double to
more than $4 billion by fiscal 2019.
The nationwide rollout of La Boulange baked goods and
sandwiches, completed earlier this year, has helped fuel sales
growth and the company plans to expand its offerings at lunch to
attract more customers at a slower time of day. "We now understand
better than ever before how to develop a larger food business in
our stores in the morning and increasingly at lunch," Starbucks
Chief Operating Officer Troy Alstead said in an interview.
Starbucks also plans to dramatically expand its evening
food-and-alcoholic beverages program. It now has 32 cafes with such
offerings, and plans to increase that over the next five years to
more than 2,700--equal to nearly a quarter of its more than 11,000
current U.S. stores. Some Starbucks cafes in Chicago, Seattle,
Portland, Ore., and Los Angeles offer small plates of cheese,
vegetables and flatbread pizza, along with desserts, wine and beer
after 4 p.m. "The opportunity is much bigger than we thought it
would be," Mr. Alstead said.
The increased focus on food comes at a time when Starbucks and
other mature restaurant brands have been trying to figure out how
to juice sales in the U.S., where growth from opening new
restaurants is limited. Some chains have added entirely new meal
times while others have added new choices across the day.
Taco Bell, a unit of Yum Brands Inc., this year began offering
breakfast, which has helped boost its results. But adding to the
menu can backfire. McDonald's Corp., for example, has suffered from
slow service as a result of bulking up its menu with offerings
including lattes and sandwich wraps.
Some analysts say Starbucks isn't immune to the same problems,
with its menu having increased in the last five years to 255 items
from 181. Domestic traffic growth has slowed at Starbucks, but the
company attributes that to customers' migration to online shopping
and not to an increase in menu items.
Starbucks plans to speed service by offering new mobile ordering
and payment technology that will enable customers to place orders
before stepping in the cafe. The new app launched in Portland,
Ore., on Wednesday and is scheduled to be rolled out across the
country next year.
Overseas, Starbucks still has a lot of room to grow by opening
new cafes. Four years ago, Starbucks said it would have more than
1,500 cafes in China by the end of 2015. It now expects to reach
that goal in the next few weeks, and is setting a new target of
doubling its China store count to more than 3,000 by 2019. The
company also plans to double the number of cafes elsewhere in
Asia--outside of China and Japan--to more than 4,000 in the next
five years.
Write to Julie Jargon at julie.jargon@wsj.com
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