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Starbucks (SBUX) Opens Store in Bali, Expands Global Presence

Zacks Equity Research

Starbucks Corporation SBUX announced the opening of One-of-a-Kind Coffee Sanctuary in Bali, Indonesia. This move is In line with the company’s strategy to bolster global presence. Notably, Starbucks Dewata Coffee Sanctuary is the largest store in Southeast Asia.

The 20,000 square feet store marks the 10th Starbucks Reserve Bar store in Indonesia. The company is optimistic about attracting customers to the store as Bali is one of Asia’s top travel destinations. The company is also working closely with farmers in Indonesia to promote Indonesian coffee to the world. Starbucks is a major buyer of Indonesian Arabica coffee.

Strategic Expansion to Drive Growth

In the past two years, management has successfully turned around its EMEA business by improving customer experience through innovative new store designs, ramping up product offerings and growing margins through process and supply chain efficiencies.

Moreover, Starbucks brand is gaining popularity with consumers across Asia as 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 increase the demand for convenience food and beverages, and promise significant growth potential. Management believes that China and the Asia-Pacific region will drive meaningful business growth over the next five years supported by rapid unit growth, improving brand awareness, and increased usage of the digital/mobile/loyalty platforms.

Stock Performance

In the past three months, this Zacks Rank #3 (Hold) company’s shares have gained 12.9%, outperforming the industry’s growth of 7.8%. Robust Americas and U.S. comparable store sales bode well for the company. Further, the company’s operating fundamentals such as solid global footprint, successful innovations, best-in-class loyalty program and digital offerings are encouraging. Moreover, digital initiatives like mobile order/pay, delivery services and third-party loyalty partnerships can stimulate robust sales trends in the Americas. Additionally, Starbucks has teamed up with Nestle SA to revitalize their respective coffee domains.

Key Picks

Better-ranked stocks worth considering in the same space include The Habit Restaurants, Inc. HABT, Bojangles', Inc. BOJA and Carrols Restaurant Group, Inc. TAST. While Habit Restaurants sport a Zacks Rank #1 (Strong Buy), Bojangles' and Carrols Restaurant Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Habit Restaurants, Bojangles' and Carrols Restaurant Group has an impressive long-term earnings growth rate of 20%, 12.5% and 20%, respectively.

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