The Economics Of Starbucks In China

September 20, 2013 in Daily Bulletin

In its quest to dominate the coffee market of China, Starbucks has run into a significant barrier: Chinese people don’t like coffee writes Gwynn Guilford:

  • The average Chinese person drinks just two cups of coffee a year – they don’t like the bitterness of the drink.
  • Thus Starbucks has rebranded itself in China by focusing more on items like bacon-gouda sandwiches and red bean frappuccinos.
  • It has since become the place where people go to socialize and conduct business outside of the home and office. Many businesses commonly refer to Starbucks as the ‘public conference room’.
  • This is also why Starbucks in China are usually fitted out like hotel lobbies and feature plush seating.
  • The initiative seems to be successful – 90% of customers drink or eat their food on premise – but it leads to substantially higher costs in China compared to the west.

See what the Starbucks cafes look like in China, where they’re being opened, and the problem of labour costs here.

Source: Quartz