Starbucks keeps its U.S. growth measured as it rethinks development
Starbucks recalibrates U.S. growth strategy amid development challenges.
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Starbucks plans to slow U.S. unit growth while focusing on international expansion, citing the need to 'fix' its development strategy. After recent closures and a decline in licensed units, the company underscores that growth may remain modest in North America through fiscal 2027. However, the brand sees potential in new coffeehouse prototypes and anticipates improving remodel strategies.
Why It Matters
This shift suggests a potential compression of available territories in the U.S., particularly as Starbucks looks to optimize its unit economics and franchise relationships while balancing its international expansion efforts.
Starbucks is recalibrating its domestic growth strategy amid evolving consumer preferences and a challenging restaurant market. According to CEO Brian Niccol, the coffee giant anticipates “modest” unit growth in North America through fiscal 2027, as it focuses on refining its approach to expansion. Currently, Starbucks operates over 41,300 locations worldwide, with around 45% situated in North America. However, the brand experienced a marginal increase of just 0.5% in its North American units over the past year and has had to close approximately 2% of its locations due to a decline in its licensed businesses, alongside the closure of 435 corporate locations last summer.
Despite the recent closures, Starbucks resumed unit growth and averaged about 44 new openings per quarter in North America over the last three quarters, a significant drop from over 100 openings prior to the closures. The brand's licensed operations, which include shops in airports and retail partnerships, have also contracted, with 41 closures reported last quarter and a total of 71 over the past three quarters.
In contrast, international unit expansion has remained more robust, with 254 new openings over the last three quarters, although this total is lower than the previous year's figures. Niccol noted that while international growth is expected to gather momentum, the U.S. market may require more time for recovery, despite having identified additional opportunities, particularly in areas like the Midwest and Southeast.
Starbucks is also enhancing the speed of remodeling existing locations, completing renovations on 650 sites last quarter and planning to remodel an additional 500 locations. Niccol stated, “Unfortunately, we did not have a great development strategy, when you go back two or three years ago.” This shift in strategy aligns with the company’s efforts to create new coffeehouse prototypes that have been globally tested for future international and U.S. expansion.
Going forward, the evolving pace of domestic unit growth suggests that Starbucks will need to monitor its development strategy closely to determine its effectiveness in navigating the U.S. market challenges.
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