Starbucks' China Problem: People Love It Too Much

Customers linger for hours, and don't always buy anything
By Kate Seamons,  Newser Staff
Posted Apr 18, 2012 9:55 AM CDT
A Starbucks staff member hands out free coffee to customers at an event to mark the 10th anniversary of Starbucks' launch in China.   (AP Photo/Greg Baker)

(Newser) – It's a good problem to have ... maybe? Starbucks is making huge inroads in China, and expects it to become its second-biggest market, booting Canada to No. 3, by 2014. But a lot of the customers who are pouring in these days don't seem to want to leave. Or, in many cases, buy anything. Reuters reports that Chinese nationals don't have the same to-go mentality of Americans and other customers, preferring to linger for hours. And with lower income levels than their American counterparts, many customers bring their own food—and, in some cases, pass on buying a drink.

Reuters, in a look at other hurdles to growth, notes that based on average wages in China, buying a tall caramel macchiato requires the equivalent of 1.3 to 1.9 hours of work. Its stores, which now number 570 there, brought in $358 million in 2010, a fraction of the $8 billion US customers spent that year. But on the plus side, its profit margins are 22% higher in China thanks to US prices and Chinese labor costs.

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