Starbucks retail strategy, metrics

If you’ve ever wondered how Starbucks can get away with having 2, 3 or even 4 stores within spitting distance of each other, it’s apparently because the lucrative morning rush creates long lines, sending customers looking for the next… Starbucks. Research shows lazy folks like you and me won’t go very far to get our fix. So there’s plenty of room for lots more Starbucks outlets in the US. 10,000, in fact. Yikes.

Oh, and here’s some benchmark data on their retail store model:

On average, such a store (1,600 square feet) costs $390,000 to open… and would turn in first-year sales of $900,000. That’s a sales-to-investment ratio of 2.3 to 1, a more-than-healthy return on the funds [invested]. And since Starbucks stores tend to take two to three years to reach full sales strength, the sales should grow a bit faster at the new stores than at old stores for a couple of years.

This gleaned from an article in the WSJ today re: a new book by Karen Blumenthal, “Grande Expectations: A Year in the Life Starbucks’ Stock”, Crown Publishing.