Store expansions, online orders help in keeping momentum on even keel

Leading coffee chains are banking on the strong growth seen in the recent quarters to chart store expansions and penetration into more lower-tier cities, despite the huge surge in online orders due to the COVID-19 restrictions.

Leading coffeehouse chain Starbucks Corp said its comparable store sales rose by 5 percent on a yearly basis during the first quarter that ended on Jan 26, driven largely by the 9-percent increase in average purchase tickets. The chain saw its total strength in the country rise to 4,800 stores, with the opening of 157 new stores in the first quarter and expanding into 15 new cities.

The company's goal is to have 6,000 stores in 230 Chinese cities by the end of fiscal 2022, with a focus on express retail service Starbucks Now, which allows consumers to place an order in advance of their visit and pick up at the store.

In terms of active members, Starbucks China has 15.4 million 90-day active members, which is 14 percent higher than the previous quarter and 51 percent more than that a year ago.

Starbucks' mobile orders accounted for a record 30 percent of the total sales, compared with 26 percent in the previous quarter, with 14 percent coming from Starbucks deliveries and 16 percent from Starbucks Now, its mobile order and pickup format.

Total mobile orders sales have more than doubled from a year ago, said officials.

Due to the resurgence in COVID-19 infections in select provinces, the company expects comparable store sales to fall by 7 percent in January, while it anticipates a 100 percent growth in comparable store sales during the second quarter, they said.

The coffeehouse chain has also continued to strengthen its links with the local communities. On Jan 29, Starbucks China opened a sign language store in Shanghai, followed by three other stores in Guangzhou, Beijing and Hangzhou. It will open more such stores in the future to offer more conveniences to hearing-impaired customers.

Luckin Coffee, which was touted as China's answer to Starbucks, has unveiled plans to start franchising as a method to further expand its current network of about 5,000 stores. In December, the embattled firm agreed to pay a $180 million penalty to settle accounting fraud charges for "intentionally and materially" overstating its 2019 revenue and understating a net loss, United States regulators said.

Joining the race in the on-premise coffee market is McCafe, the in-house coffee service of fast-food chain McDonald's. The company said in November that it would invest 2.5 billion yuan ($152.1 million) over three years to open new shops and boost deliveries. It is expected to open more than 4,000 McCafes across the country by 2023.