SEATTLE -- Two of the biggest competitors for coffee business unveiled their growth plans this week, one Starbucks with plans nationally, and the other Dunkin' Donuts with specific plans for growth in Philadelphia and other metropolitan markets.
Starbucks Corp., the world's largest coffee shop chain, plans to more than double its U.S. stores, exceeding a current target of 15,000 locations, according to a Bloomberg News report.
"We believe the saturation opportunity in the U.S. is not 50% there," chairman Howard Schultz [image-nocss] told Bloomberg News Tuesday. The company now has 8,614 U.S. stores.
Starbucks may tell analysts at an Oct. 5 meeting that it will lift its goal to 20,000 U.S. locations, said UBS Securities LLC's David Palmer. The Seattle-based company is adding 2,000 stores in the year through Oct. 1, or about five a day, as it tries to attract new consumers and boost profit. Last year it added 1,672 stores.
Schultz, trying to reverse slowing sales at existing stores in the past two months, aims to open more locations in areas where the company is underrepresented, including parts of the United States, China and India. In July and August, sales growth at stores open more than 13 months was the lowest in four years.
"There is a ton of white space in the rest of the country, and Starbucks is going to where the people are," Palmer said. "They've accelerated in the U.S. dramatically this year. America doesn't want to home brew."
Starbucks had 12,142 stores around the world at the end of August, about 70% of them in the United States. Schultz, 53, said stores in neighborhoods it previously overlooked, including New York's Harlem, have performed as well as stores in wealthier neighborhoods, such as New York's Upper East Side. That gives the company "all these real estate possibilities we have never looked at before."
Next year, Starbucks expects to add 2,400 new locations globally, or about six new stores a day. About one-quarter of new Starbucks stores this year are being built outside the United States.
Meanwhile, Dunkin' Donuts plans to add 250 locations in the Philadelphia region by 2010, according to a report in the Philadelphia Inquirer. Its expansion plans aim to boost the company's presence closer to what it has in the Boston area, where there is a Dunkin' Donuts for every 6,000 residents, company officials said.
Lynette McKee, vice president of franchising for Dunkin' Brands Inc., said doughnuts were an intrinsic part of the company's image, but coffee is more important to sales, with beverages accounting for 63% of the chain's sales in the United States.
"Philadelphia is one of those markets where we do really, really well," but the company needs more locations to be as convenient as consumers expect, McKee said.
In the region from Atlantic City to Reading and from Trenton to Dover, Del., there is one Dunkin' Donuts for every 18,000 residents. After the expansion from 420 to 670 locations, there will be one for every 11,000, the Canton, Mass., company said.
The Philadelphia plans are part of a national effort to expand in existing markets, such as Chicago, Atlanta and New York, as well as to enter new markets, including Charlotte, N.C., and Nashville, Tenn.
Dunkin' was the 10th-largest U.S. restaurant chain last year, with sales of $3.85 billion, according to Technomic Inc., a Chicago research firm. It was the third-fastest-growing behind Starbucks and Subway.
The chain will add the 250 stores through existing and new franchisees.
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