BERLIN, Germany (Reuters) - Starbucks plans to open more stores at train stations and on motorways in Germany to make a profit in Europe’s largest economy, the U.S. group’s European boss said.
The world’s largest coffee chain has struggled to expand as quickly as it wanted in the European Union’s biggest and most prosperous economy. When Starbucks originally entered the country in 2002, it said it wanted 200 stores.
Now, 10 years on, it has 160 stores in 40 towns and management has previously admitted they took the wrong path by opening stores in expensive town center locations near shops.
“We will definitely open more stores,” Kris Engskov, who has headed the group’s Europe, Middle East and Africa (EMEA) division since May, told Reuters in an interview.
He said the chain would concentrate on big cities like Berlin, Munich and Duesseldorf.
Starbucks has been reviewing its stores in Europe over the last five quarters, closing 72 in that time, but said at its fourth-quarter results last month it now plans to open 150 new ones in the EMEA region in its new fiscal year.
The U.S. group will mostly look to open new stores in train stations, motorway service stations and so-called Corner Cafes, which are self-service areas within offices, said Engskov, who used to head the group’s UK & Ireland business.
Starbucks currently has 100 Corner Cafes in four countries, including Switzerland. “We want to open Corner Cafes in 10 countries and Germany has priority,” Engskov said.
He also said Starbucks would look to open more stores under a franchise system. The group has just started franchising in Britain and plans to award a first license in France this year.
The franchising system, where franchise holders take on more of the risk of investing and running individual stores, is popular with fast-food chains such as Burger King and Domino’s Pizza.
“We will also examine whether this makes sense in Germany,” Engskov said.
He said these efforts should make Starbucks profitable in countries like Germany and Britain, where it has come under fire over accusations that it has not paid enough tax.
The group said last month that sales rose 3 percent in the Europe, Middle East and Africa region and its fourth-quarter operating income of $27 million was the highest achieved since it started separating out EMEA profits in 2010. It did not give details of profits for the individual countries.
“I am certain that our new strategy will lead to long-term profitability in Germany, France and Britain,” Engskov said.
Reporting by Nadine Schimroszik; Writing by Victoria Bryan; Editing by Mark Heinrich