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Starbucks Opens Concept Stores in Beijing

Zacks Equity Research

Starbucks Corporation (SBUX) strengthened its presence in China with the opening of two iconic concept stores in the capital city of Beijing.

The ‘coffee tribute’ store is located at the Kerry Center, while the 24-hour store has been set up in the heart of the Taikoo Li Sanlitun district of Beijing. The new concepts offered by the stores are expected to boost the Strabucks coffee experience in the country.

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

Starbucks' business in China is rapidly growing and the region is expected to become its second-largest market by 2014. The company is planning to take the store count in this region to 1,500 in 70 cities by 2015. Management believes that China and the Asia-Pacific (CAP) region will drive substantial business growth over the next five years. The CAP segment is expected to have more than 4,000 stores by the end of 2013, including more than 1,000 stores in Mainland China and more than 500 stores in South Korea. The company also expects to introduce its CPG business in China in the long term.

Among other emerging markets, Starbucks has 16 stores in the lucrative Indian market and opened its first store in Vietnam this year. Further, it plans to open 100 stores each in Indonesia and Philippines over the next 3–4 years.

Other Stocks to Consider

Starbucks carries a Zacks Rank #3 (Hold). Other restaurateurs such as Burger King Worldwide, Inc. (BKW), CEC Entertainment Inc. (CEC) and Cracker Barrel Old Country Store, Inc. (CBRL) are currently doing well and have a bright outlook. All these stocks carry a Zacks Rank #2 (Buy).

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