Even more stores? Not a tall order for Starbucks

Asked why he favors Starbucks, Sanders said: “It’s the coffee.”

It’s highly unusual for a company to be able to add so many stores so close together and still see the kind of consistently strong sales growth Starbucks can boast, said John Owens, an equity analyst with Morningstar.

“At some stage there (are) limits to their expansion, but to date we really haven’t seen any signs that they are near that point,” Owens said.

Still, Owens said there are risks a company faces when it builds out quickly. He noted that McDonald’s Corp. suffered after an attempt to expand rapidly in the 1990s. McDonald’s has more than 30,000 stores worldwide, compared to about 12,000 currently for Starbucks.

Major concerns could include anything from a drop in quality to the brand losing its luster.

Krispy Kreme Doughnuts Inc., whose store openings once drew cars full of doughnut-hungry masses, learned that lesson the hard way and has since had to sharply scale back its growth plans. The doughnut maker also has suffered through an accounting fiasco and concerns over the healthfulness of its fatty treats.

For now at least, Owens said Starbucks doesn’t appear to have similar worries.

“We haven’t seen any evidence of it, but that’s certainly a risk,” Owens said. “How can they continue to maintain such a strong connection with the customer as they become just basically a global giant?”

But executives say one main complaint they hear from customers is that Starbucks isn’t convenient enough. Starbucks customers don’t want to go too far out of their way to get their morning latte or afternoon pick-me-up. And once they have stepped into their vehicles, they don’t want to bother to undo their seat belts for a caffeinated treat, either — hence the explosive growth of Starbucks drive-throughs.

Besides adding stores, drive-throughs and kiosks throughout the world, Starbucks also has plans to make itself ubiquitous even in places where it can’t squeeze in a store. It is getting ready to launch Starbucks-branded vending machines, which will let people buy warm lattes and other drinks in a nine-ounce can for $2.50. And that’s in addition to the business it already does selling bottled cold Starbucks drinks and coffee beans in more traditional food stores.

Sitting in Starbucks’ Seattle headquarters a day after the company announced that it had increased its projected store count by a third, to 40,000 stores, company Chairman Howard Schultz said he thought the company had been vastly underestimating the worldwide demand for its coffees, teas, CDs, coffee mugs and other items.

“This is still the opening act for Starbucks,” he said.

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