Starbucks to open 1,500 more cafes in U.S

Pedestrians walk past a branch of the Starbucks Pedestrians walk past a branch of the Starbucks cafe chain in west London on Monday. Starbucks announced plans to open more 1,500 more stores in the United States, boosting the number of U.S. cafes by about 13 percent. (Dec. 3, 2012) Photo Credit: AP

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Another Starbucks may soon pop up around the corner, with the world's biggest coffee company planning to add at least 1,500 cafes in the United States over the next five years.

The plan, which would boost the number of Starbucks cafes in the country by about 13 percent, was announced at the company's investor day in New York Wednesday. Taking into account Canada and South America, the company plans to add a total of 3,000 new cafes.

The company also said it expects China will surpass Canada as its second-biggest market.

Although Starbucks has been intensifying its growth overseas and building its packaged-goods business back at home, the majority of its revenue still comes from its more than 11,100 cafes in the United States.

In an interview before its investor day, CEO Howard Schultz said the U.S. expansion plans are based "on the current strength of our business." Just a few months ago the company had predicted it would open just 1,000 new cafes in the country over the next five years.

The upbeat expansion plans mark a turnaround from Starbucks' struggles during the recession. After hitting a rough patch, the company brought back Schultz as CEO in 2008 and embarked on massive restructuring effort that included closing 10 percent of its U.S. stores.

Cliff Burrows, who heads Starbucks' domestic business, said the problem wasn't that Starbucks was oversaturated, but that the company hadn't been careful about its store openings. In the years leading up to the downturn, the company was opening well over 1,000 stores a year. That pace led to cafes in locations where signs or traffic might not be optimal, he said.

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Burrows said Starbucks has gotten more sophisticated, and he noted that the cafes opened in recent years are among the company's best performers.

Sales at new cafes are averaging about $1 million a year, above the company's target of $900,000. It costs about $450,000 to build a new cafe. -- AP

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