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How Is Starbucks Expanding Its Business?

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Current operations

By the end of fiscal 1Q17, Starbucks (SBUX) operated 25,734 restaurants—12,870 of those were company-owned restaurants and 12,864 were franchised restaurants.

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SBUX’s unit growth

In the last 12 months, Starbucks (SBUX) has increased its overall unit count 9.2%. The company increased the unit count of its company-owned restaurants by 504, and it increased the number of its franchised restaurants by 1,659 units.

Moving to its segmental unit growth, Starbucks’s Americas segment increased its company-owned restaurant unit count by 342 in the last 12 months, while the unit count of its franchised restaurants unit count increased by 630.

During the same period, the company’s CAP (China and Asia-Pacific) segment increased its company-owned restaurant count by 373, while the unit count of its franchised restaurants increased by 630.

In the EMEA (Europe, the Middle East, and Africa) region, the company is looking at franchising for expansion. In the last 12 months, the segment refranchised some of its company-owned restaurants, which led to a decline in company-owned restaurants by 193 units. During the same period, the unit count of franchised restaurants increased by 489 restaurants.

In All Other Segments, the company-owned restaurants and franchised restaurants declined by 18 units and two units, respectively.

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Outlook

In fiscal 2017, Starbucks (SBUX) plans to add 2,100 new restaurants. Of these, 1,000 would be in the CAP region, 800 would be in the Americas segment, and 300 would be in the EMEA region.

Starbucks is betting big on China. By 2021, the company plans to increases its unit count from its current 2,600 to 5,000 units. For the overall CAP segment, the company plans to increase the unit count to 11,000 by 2021.

ETF exposure

You can gain exposure to Starbucks (SBUX) by investing in the Consumer Discretionary Select Sector SPDR ETF (XLY), which invests 3.3% of its holdings in Starbucks. XLY also invests 4.1%, 0.91%, and 0.49% in McDonald’s (MCD), Yum! Brands (YUM), and Chipotle Mexican Grill (CMG), respectively.

Next, we’ll look at analyst revenue expectations for the next four quarters.

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