Starbucks Corp's new chief executive said the world's biggest coffee chain is making a long-term investment in China.
Kevin Johnson, who succeeded Starbucks co-founder Howard Schultz as CEO in April, is tasked with the difficult job of finding new ways to deliver the robust growth that Wall Street has demanded from the popular chain.
US restaurants are locked in a bitter fight for market share, battling new competition from non-traditional rivals such as meal kit sellers and convenience stores.
Sales at its mainstay U.S. cafes open at least 13 months rose 5 percent in the latest quarter. Traffic turned slightly positive, reversing three straight quarters of declines that the company attributed in part to changing its loyalty program to focus on dollars spent rather than the number of purchases they make.
Same-store sales from China, where there are 2,800 stores in 130 cities, were up a robust 7 percent in the latest quarter. The 16,302 cafes in Starbucks' U.S.-dominated Americas region contributed $974.8 million in operating income in the quarter. In contrast, the 7,183 cafes from the China/Asia Pacific region posted $223.8 million.
Johnson told Reuters that the cash deal in China, which will give it ownership of about 1,300 stores in Shanghai and Jiangsu and Zhejiang provinces, is part of the company's "long game" in the country that is its fastest-growing market outside the U.S.
