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Quick bucks for Starbucks: chain to open outlets amid recession
Jonathan Prynn26 Mar 2009
US chain Starbucks is using the recession to blitz London's struggling high streets with yet more coffee shops.
Chief executive Howard Schultz, who enraged Peter Mandelson last month by describing the UK economy as "in a spiral," told the Evening Standard that the company's expansion in the capital will not be halted despite the tougher economic climate.
There are already around 260 branches in and around London, making it the Starbucks capital of the world, ahead even of Manhattan, where there are 200.
But Mr Schultz said the exploding number of coffee outlets in London meant Starbucks would need to open even more stores just to stay ahead of competitors such as Caffè Nero and Costa Coffee.
He said: "There is a proliferation of coffee stores in the UK and specifically in London.
"People are voting every day and they're voting for Starbucks. We're the leader here and we will maintain that."
Starbucks is closing almost 1,000 stores globally because of the world downturn but the vast majority are in America and Australia.
The head of Starbucks in the UK and Ireland, Darcy Willson-Rymer said the slowdown in the high street, which has forced the closure of many shops, was opening up opportunities for new branches in areas where Starbucks is not currently represented.
Most of Starbucks' London outlets are located in central, west and south-west London. Conversely, many parts of north and east London and the outer suburbs are still "Starbucks-free" zones.
Almost 150 of the London branches are within three miles of Charing Cross - the traditional centre of the capital.
Mr Willson-Rymer said: "We've got pretty good coverage in London but there are areas where there is demand where we aren't [represented] today and we continue to explore those."
He added the recession meant it was "a buyers' market" for companies such as Starbucks looking for new sites to rent. Retail rents fell for the first time since the early Nineties last year and in some parts of London are already around 10 per cent down on 2007 levels.
Mr Schultz said: "We're not only here to stay but our best days are ahead of us especially in the UK, where it's still early for us. We've great confidence in our business here and we're going to continue to grow the market."
Mr Schultz, who is in London to launch Starbucks' new instant coffee brand Via, also warned rival chains that some would fall by the wayside because they do not have "a sustainable roadmap".
But the promise to open more stores received an angry response from campaigners who say that global giants such as Starbucks are driving out independent neighbourhood coffee shops. Andrew Simms, policy director of the New Economics Foundation think tank, said: "My reaction is like the tag-line for the Jaws movie. Just when you thought it was safe to go back into the high street, the chains see it as a chance for aggressive expansion.
"We would like to see the recession as a chance to turn the high street into something more than just a bland expanse of chain stores.
"The thought that the likes of Starbucks see this as an opportunity to expand feels like kicking the high street when it's down."
Reader views (7)
I love Starbucks. I'm not sure why so many people are against it. And what independent coffee shops is it replacing? If you are a good neighbourhood coffee shop or cafe, then you have nothing to fear from the likes of Starbucks. If you are offering what the customers want, then you will beat Starbucks easily. But mostly, local stores offer bad service, and bad food options. Surely it's up to customers to decide. Most people want Starbucks. That's why they go there. If they prefer their local store, then they would continue to use it when Starbucks arrived in the neighbourhood. Long live Starbucks. From a very happy customer.
- Steve Jones, London, 25/12/2009 16:38
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Well with the economic downturn, London's retail outlets look relatively cheap. Provided they are cash rich, a known brand and lump the costs on the franchaise owner, they can effectively buy up retail frontage, wait for the economy to settle then sell on the units rental agreement for a profit. Regardless of the franchaise owner. It just asset stripping in a more esoteric way. They have spotted a niche and between rent to Starbucks or a charity shop in the short term, guess which the owners would prefer.
- Ian, London, 25/12/2009 15:38
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I'm sure Starbucks is first choice - for tourists and those who don't like their coffee to taste of coffee.
- Blue Baby, London, 25/12/2009 15:38
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Can we have some other brands of coffee company in please Caffe Neros would be good
- Jules, Paris, France, 25/12/2009 15:38
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I think we need Gin Parlours; not Coffee Shops.
There is an opening here for someone.
- Mickyinlondon, london, 25/12/2009 15:38
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bad food. and now more bad coffee?
- Kanan Krishnan, mountain view, 25/12/2009 15:38
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No - Starbucks is not just for tourists. Everyone I know would much rather go to Starbucks than Costa or Nero (there is much more choice!).
But, as the article says, we are Starbucks deprived in North London. Come on Starbucks! How about a shop in East Finchley or Hampstead Garden Suburb?!?!
- Brian, London, 25/12/2009 15:38
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