Back to top

Starbucks Opens Store in Cambodia, Eyes Global Expansion

Read MoreHide Full Article

Starbucks Corporation (SBUX - Free Report) will open a third store in Phnom Penh, Cambodia, with plans to foray beyond the saturated U.S. market. There has been a 10% annual increase in coffee consumption in the Southeast Asian nation lately.  

Cambodia is one of the fastest growing economies in the world. Thus, to cash in on the bountiful opportunities, Starbucks plans to cater to the needs of tourists as well as young professionals here. At the same time, the company will modify features like food service to suit local preferences. Notably, Starbucks already operates more than 6,200 stores in China and the Asia-Pacific region.

The company has shifted focus to the China-Asia-Pacific segment (“CAP”) due to increased traffic slowdown in the flagship U.S. market. Comps in the U.S. fell below 5% in the third quarter of 2016. Notably, sales growth in the third quarter was largely supported by the China-Asia-Pacific segment. Overall sales rose 7% year over year while net revenue increased 18% to $768 million at the CAP segment.



In the wake of intensifying competition from restaurant companies like Denny's Corporation (DENN - Free Report) , Papa John's International Inc. (PZZA - Free Report) and Del Taco Restaurants, Inc. (TACO - Free Report) , Starbucks has been making efforts to boost sales through various expansion and innovation initiatives.

The company expects to open 1,900 stores in 2016 of which 900 will be launched under the CAP segment. Management is also positive about its prospects in Asia and looks to tap in on the opportunities in the days ahead.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand.  Click to see them now>>

Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »

More from Zacks Analyst Blog

You May Like