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SBUX to Expand in Southeast Asia

Zacks Equity Research

Starbucks Corporation (SBUX) recently announced plans to open 100 new stores each in Indonesia and Philippines over the next 3-4 years.

The coffee giant plans to expand in the lucrative South-East Asian market by opening 100 new stores in Indonesia over the next 3 years and another 100 in Philippines over the next 4 years. Starbucks already has a presence across 6 South-East Asian countries, including Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, through more than 700 stores.

The Starbucks brand is gaining popularity with consumers across Asia as the company continuously expands its store base outside the U.S. Starbucks is increasingly investing in the Asian markets, which have significant growth potential due to their relatively low per-capita consumption as well as a burgeoning middle class with rising income levels, which in turn is increasing the demand for convenience food and beverages.

Starbucks’ China and the Asia-Pacific (CAP) segment has produced strong double-digit comps for 11 consecutive quarters.  Management believes that the CAP region, which has grown 33% (in terms of revenues) since 2010, will drive more meaningful business growth over the next 5 years.

Starbucks' business in China is rapidly growing and the region is expected to become the company’s second-largest market by 2014. The company is looking forward to take the store count in this region to 1,500 in 70 cities by 2015.

Recently Starbucks entered the lucrative Indian market with its first 3 stores opening in Mumbai in October and a 4th store in Delhi in early 2013. Starbucks also entered the Vietnam market in Feb 2013 with a store opening in Ho Chi Minh City.

Other Stocks to Consider

Starbucks carries a Zacks Rank #2 (Buy). Some other stocks in the retail/restaurant industry that are currently doing well and are worth considering include Red Robin Gourmet Burgers Inc. (RRGB) – Zacks Rank #1 (Strong Buy), Burger King Worldwide, Inc. (BKW) – Zacks Rank #2 (Buy) and Dunkin' Brands Group, Inc. (DNKN) – Zacks Rank #2 (Buy).

Read the Full Research Report on SBUX

Read the Full Research Report on DNKN

Read the Full Research Report on BKW

Read the Full Research Report on RRGB

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