Starbucks Announces Big Expansion

Starbucks, the biggest coffee business in the world, announced it was planning to add up to 1,500 new cafes over the next five years in the U.S. The new plan, which would increase the number of cafes in the U.S. by 13%, will be officially announced on Wednesday in New York at investor’s day.

In addition, the company, based in Seattle, will start serving a new tea throughout its cafes. Instead of serving the Tazo tea, the coffee company will turn to Teavana, which it announced last month that it would be acquiring.

Across the globe, the company said it would have over 20,000 before 2014, which is up from its current café count of more than 18,000. Much of the worldwide growth will take place in China, which Starbucks said would pass Canada as its second biggest market only trailing the U.S.

Although the company has intensified growth worldwide and has built its packaged goods company at home, most of its revenue is still generated from the 11,000 plus cafes in the U.S.

The expansion plans for Starbucks mark a new turnaround for the company, which has struggled during the financial crisis. Following a rough period, the company brought Howard Schultz back as its CEO in 2008 and started an effort to restructure that included closing more than 10% of its stores in the U.S.

The head of domestic business in Starbucks, Cliff Burrows, said the company’s problem before was not that there was an oversaturation of Starbucks, but the company had not taken care with its store openings. That in turn led to cafes being located in areas where traffic or signs were not optimal.