Coffee chain Starbucks opens largest-ever store in Shanghai

Roastery outlet is key element of giant company's efforts to attract China's more-affluent customers

Starbucks, the world's largest coffee chain, opened its biggest cafe in the world in Shanghai on Dec 13, with an eye on attracting more diversified and technology-savvy customers.

The Starbucks Reserve Roastery is the company's largest cafe of its kind and comes three years after the company launched a Roastery in Seattle. It is planning to open similar outlets in Milan, New York and Tokyo soon. The Shanghai outlet is also part of the coffee chain's long-term expansion plans in China.

Kevin Johnson, CEO of Starbucks Coffee Co, says the Roastery will serve as an innovation hub for developing new kinds of beverages and store designs.

Johnson, who became the CEO in April, says the company plans to work with more Chinese technology companies to enhance digital experiences in aspects like mobile payment, mobile ordering and supply chain management.

Howard Schultz, executive chairman of Starbucks, says the coffee market in China will achieve the same scale as that of the United States in nine years. He says that in addition to extending its food offerings in stores in China, it has plans to have stand-alone Rocco Princi bakery stores in the country.

Currently, the company is opening one outlet every 15 hours in China and has set a target of reaching 20 new cities each year.

China is the company's fastest-growing market, with more than 3,000 stores in 136 cities.

By 2021, it expects to have 5,000 outlets in China. China is also the biggest revenue driver for the Seattle-based coffee chain, since its same-store sales in China increased by 8 percent in the third quarter this year, while other stores in the Asia-Pacific region rose by only 3.2 percent.

Starbucks already has over 600 outlets in Shanghai - the largest number in any city where it has a presence.

According to Kantar Worldpanel China, Starbucks has a penetration rate of 37 percent in Shanghai, where coffee outlets in general had a penetration rate of 48 percent by the end of October.

The market has demand for more hand-brewed coffee outlets, while the roastery in Shanghai is a good opportunity for Starbucks to upgrade its products and branding, says Jason Yu, general manager of Kantar Worldpanel China.

In other first-and second-tier cities, the penetration rate is 16.8 percent for general coffee shops and 9.9 percent for Starbucks.