Conor Mac's avatar
$316.8m follower assets
Starbucks' Chinese Footprint Resembles a Coiled Spring
Since the beginning of 2019, Starbucks' Chinese footprint has grown from 3,685 to 5,654 stores (+35%) $SBUX. As ugly a picture the lockdowns paint on revenues, the bull case would imply this is a tightly wound spring, ready to pop when things are "normal".

In the second quarter of 2022, Chinese revenue fell 14% YoY, with average ticket down 4% and the volume of transactions down 20%, leading to a 23% decline in comparable-store sales. The recent zero-covid policy of China, and nationwide lockdowns, is clearly hurting Starbucks.

Below is a visualization from 2018 (the furthest back China data goes). The China business is likely to look ugly for a little while with 1/3 of stores closed in Q2. After resurgance in 2021, the segment is now plagued by mobility once more in 2022

*Q2'22 revenue is TTM

But Howard Schultz states that he remains "convinced Starbucks' business in China will be eventually larger than our business in the U.S."
Scoreboard Investor's avatar
Definitely makes sense. Hopefully this spring gets the chance to pop for us shareholders
Conor Mac's avatar
@scorebdinvestor Schultz envisions the China business being larger than the US one in the future too. Pipe dream stuff, but he was right about projection 5K stores over a decade ago.
Scoreboard Investor's avatar
@investmenttalk After 3 trips on this ride, I believe him 😂 having all those stores built coupled with the population, I think it’s a no brainer once they can achieve full capacity
Nate Pabrai's avatar
I’m thinking Luckin $LKNCY looks attractive by contrast
Conor Mac's avatar
@nate Not sure i’d trust a company that got de-listed for cooking the books.