Starbucks eyes 100 more outlets as group profits rebound

Last year, store openings targeted key drive-thru and high-footfall city locations.

Starbucks UK Coffee Company plans to add 100 more outlets in 2024 as the company experiences a ‘strong, resilient revenue growth’ amidst challenging economic headwinds in the UK resulting in total revenues reaching £547.7m, up 21.9% compared to the last year.

Starbucks ended the year with a total of 1,168 stores in the UK, fulfilling its commitment last year. Of these, 354 were company-operated stores and 814 were run by licensees – a 30/70 split, approximately which is flat on last year.

Operating profit rebounded for the period, rising to £21.7m with margins increasing compared to last year. Starbucks attributed this growth to improved operational leverage from a larger store portfolio, stronger performance from licensed stores which is margin positive, the outperformance in its cold beverage platform, improvements in average basket value per customer which were driven by customers buying a more favourable mix of items and improvements in productivity within our labour force during the period.

New store openings were targeted in key drive-thru and city locations with high traffic and footfall counts. In total, Starbucks has 335 drive-thru stores at the end of FY2023, of which 39 are company-operated stores, and 296 are licensed/franchised stores.

Macroeconomic conditions impacting profits

The group said though it sees continued growth in the UK coffee market, the cost of living crisis continues to dampen high street and city location footfalls.

“The Company continues to navigate, and respond to, changing consumer demands by ensuring that it actively manages its menu offerings. The value of an average customer basket increased year on year, driven by the increase in popularity of our cold beverage platform with drinks like the Refresha, Iced Shaken Espresso and Clotted Cream Cold Fudge Brew. Growth was also seen in customers adding food to their purchases with items like Egg Bites and Cake Pops performing strongly,” Starbucks said.

Meanwhile, inflationary pressures on dairy and coffee commodity prices in 2023 contributed to the rising input cost of the company. Overall costs were also higher as a result of wage increases during the year and as a result, the company had to enact strategic price increases that were taken in line with these rising input costs into the business.

“Investment in digitalisation and technology has improved the Company’s loyalty program and led to growth in the programme’s 90-day active members, going from 600k to 1.2m by the year-end. This focus has improved customer convenience and fostered increased engagement and loyalty which has translated into higher frequency of visits. The Company continues to build upon this in 2024 through the rollout of further digital initiatives,” Starbucks said in its statement.