Starbucks Corporation (SBUX) Is Counting on China

Peer comps
It may be noted that Starbucks by no means is lacking company in the middle kingdom. Its peers from back home – McDonald’s Corporation (NYSE:MCD) and Dunkin Brands Group Inc (NASDAQ:DNKN) – also have their eyes set on China.

Mickey D which is currently looking for consolidation and restructuring in the US and Europe have a very different strategy for China. The company plans to open more than 300 restaurants here with the intent to reach its targeted 2,000 restaurants in China by the end of 2013. In the coffeehouse sector McDonald’s Corporation (NYSE:MCD) share is pegged at below 10% by analysts. Adjusting for seasonality, same store sales in the company’s Asia Pacific Middle East and Africa segment grew 1.5% in February driven by China and Australia.

Meanwhile, Dunkin Brands Group Inc (NASDAQ:DNKN) is planning to increase its doughnut and coffee chain in China by three times through the next ten years. The company has over 1,450 outlets in Southeast Asia. However Dunkin Brands Group Inc (NASDAQ:DNKN)’ is more popular in China for its Baskin Robbins ice cream rather than its doughnuts and coffee. The company has recently entered into new franchise agreements through which it will open around 250 new Baskin Robbins outlets in China over the next ten years.

Last word
I will conclude by saying that Starbucks Corporation (NASDAQ:SBUX) is a tremendous brand. The company is doing well globally with fiscal 2013 first quarter net revenue growth of 11% to $3.8 billion and EPS growth of 14% to $0.57 per share. Globally it witnessed healthy same store sales growth of 6%. It has also made the strategic acquisition of Teavana Holdings for growing in the tea business. The company’s strategy in China further augments its growth potential manifold.