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Starbucks will be more ubiquitous than Subway and McDonald's

Starbucks is set to overtake both Subway and McDonald's as the world's biggest restaurant ch...
Newstalk
Newstalk

12.47 5 Jan 2017


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Starbucks will be more ubiquit...

Starbucks will be more ubiquitous than Subway and McDonald's

Newstalk
Newstalk

12.47 5 Jan 2017


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Starbucks is set to overtake both Subway and McDonald's as the world's biggest restaurant chain, as it is predicted to buck industry forecasts and continue opening outlets across the globe at an impressive rate.

Leading restaurant industry analyst Mark Kalinowski made the prediction as he named the Seattle coffee giant as his top restaurant stock for 2017.

The Nomura expert revealed that he expects the company to increase its number of chains by 8.4% this year, with sales climbing 5%. Ultimately, he predicts that Starbucks could boast 50,000 locations worldwide, more than any other global chain.

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Kalinowski cites the room for growth in the beverage industry and relative lack of competition as reasons why it has an edge over McDonald's and food-focused rivals.

The positive news comes off the back of a sluggish year for Starbucks, with stock falling 7.5% due to concerns about slow growth and the uncertainty created around CEO Howard Schultz announcing his plans to step down.

Chief operating officer Kevin Johnson will take over the role, chosen to help the company shift its focus towards tech innovations. Schultz will be sticking around in a different capacity, leading the team developing its Reserve Roastery and Tasting Room.

Reserve Roastery

Kalinowski commented:

"It is only a matter of time before Starbucks overtakes McDonald's as the largest market cap restaurant stock, although likely not in 2017...

"Well beyond 2021, we would not be surprised to see Starbucks exceed the 50,000 store level."

Starbucks itself is eyeing 37,000 cafes by 2021, up from the 25,000 it had last year.

It would mean more frappuccinos on street corners than Big Macs for the first time – McDonald’s currently has 36,615 locations. The Golden Arches company is worth over $98 billion, with Starbucks valued at $79 billion.

Subway boasts 43,945 sandwich shops in 110 countries – a figure Starbucks will eventually top if Kalinowski is correct – but is worth significantly less than its two main "restaurant" competitors.

The industry as a whole is not expected to see much expansion in 2017, according to the NPD Group.


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