SEATTLE – Starbucks Corp. (SBUX) Thursday raised its long-term goal for how much larger it wants to get by 20 percent, citing opportunities to put more of its coffee shops in smaller U.S. markets.
The Seattle company raised its target to 30,000 stores, up from its previous goal of 25,000, Chairman Howard Schultz said during a meeting with analysts. He did not set a specific time frame for reaching that size, which would put Starbucks on par with fast-food chains like McDonald's Corp. (MCD) and KFC and Taco Bell owner Yum Brands Inc. (YUM).
The additional 5,000 stores will be focused in the United States, specifically in smaller markets the company has entered in the past two years. The chain currently has more than 8,500 stores, with nearly 6,000 in the United States.
"It is a bigger market today than it was five years ago," Starbucks Chief Executive Orin Smith said at the meeting, adding that the company was having more success expanding into rural areas and Hispanic neighborhoods, among other markets, that it had not previously counted on.
Starbucks' drive-thru stores will play a major part in its expansion into both new and existing markets, Smith said, adding that there was still plenty of room for the company to grow in places where it already has a significant presence.
One analyst said the company had been hinting at raising the U.S. store target for some time.
"I don't think that was necessarily a surprise," said McAdams Wright Ragen analyst Dan Geiman. "These guys are running on all cylinders at this point... there is so much opportunity for this company."
Starbucks stood by fiscal 2004 earnings estimates of 94 cents to 95 cents per share and its 2005 earnings forecast of $1.12 per share to $1.15 per share. Wall Street analysts, on average, expect Starbucks to earn 95 cents per share in 2004 and $1.16 per share for 2005, according to Reuters Estimates.
"We continue to believe we can grow this company's top line by 20 percent or more," said Smith, who said earlier this week he will retire next year.
Starbucks shares rose 14 cents to close at $47.79 on the Nasdaq.