The Washington Post recently reported that a new Starbucks opened in Warsaw and there were lines around the inside the store, out the door, and up and down the street!
So much for a company in trouble! While some in the investment community might have the perception that the Starbucks brand is tarnished in the US, in Central Europe, the arrival of Starbucks has been greeted with “undiluted enthusiasm.”
Globally, many US consumer companies with strong brands provide a certain status symbol to a particular county. It’s interesting that the author of the article noted that “the arrival of McDonald's in Warsaw in the early 1990’s signified for many the arrival of capitalism in Poland. The arrival of Starbucks in Warsaw signifies the entry of Central Europe not just into the capitalist world but also into the world of 21st-century-style prosperity.”
Starbucks and prosperity! Sounds good!
Prosperity in Poland is a far cry from the dark days of communism and it appears that Starbucks is the brand Poles associate with prosperity! The coffeehouse culture is a tradition in Europe, especially Central Europe; as coffeehouses became meeting places where people gather. Has Starbucks brought the coffeehouse culture full circle in Central Europe? Seems like a strong bet to make.
SBUX has highlighted that one of its key initiatives going forward will be to "focus on disciplined global store expansion in key markets." Note the mention of "disciplined" growth as management will unlikely forget the mistakes it made in the U.S. Importantly, much of SBUX's growth internationally stems from licensed store and joint-venture growth (as is the case with the new store in Poland). Licensed and joint venture stores make up about two-thirds of all SBUX's international stores versus less than 40% in the U.S. This licensed growth strategy lessens the risk to SBUX as it allows the company to rely on its partners' capital while still benefiting from increased royalties and licensed fees. The company's growth in other markets, like Poland, will also decrease SBUX's relative international exposure to Canada and the U.K., which currently make up about 77% of SBUX's international comparable sales growth and have been largely responsible for the slowdown in international same-store sales growth.
Starbucks Coffee, Warsaw Poland