Starbucks Korea to seek breakthrough with new concept stores

Starbucks Reserved store at the Korea Chamber of Commerce and Industry headquarters in Seoul / Courtesy of Starbucks Korea

By Kim Jae-heun

Starbucks Korea is preparing to open a bakery at its coffee shop in Yangpyeong, Gyeonggi Province, this month, as part of its strategy to increase profits from food sales.

Currently, the American coffeehouse chain creates 70 percent of its revenue here through beverage sales, 20 percent from snacks and 10 percent via merchandise.

Despite its position as a leader in the coffee franchise business, Starbucks Korea believes it has reached the limit as to how many beverages it can sell here and decided to strengthen its food category.

Starbucks has already opened coffee shops with bakeries in the United States, Japan and China but this will be the first to open in Korea.

The new store in Yangpyeong will be the first to have a "bake-in" installation in Korea, providing customers with a unique Starbucks experience along with its Reserve and Teavana stores.

“We are opening a bakery in the Yangpeyong store with an aim to offer various services to customers while continuing to make quality coffee drinks,” a Starbucks Korea official said.

Starbucks stores in Korea have been outsourcing supply of its food items from Shinsegae Food, whose mother company E-Mart runs the coffee chain here as a joint venture with Starbucks headquarters in Seattle.

The Starbucks coffee shop in Yangpyeong will be take delivery of baking supplies from Shinsegae Food and bake desserts on site to ensure the products are fresher than offsite baked products.

Starbucks Korea also said it will introduce new bakery items more often ― every month or two ― for customers to enjoy with beverages.

The sales coming from bakery products at Starbucks stores are said to grow by over 20 percent every year.

Unlike its rival coffee franchise Ediya that focuses on expanding business through opening more stores, Starbucks Korea is establishing specialty stores nationwide offering exclusive products.

At Starbucks Reserved, Cheongdam, Seoul, customers can experience sandwiches and salads exclusive to the store.

The Jeju Matcha Frappuccino can only be found at Starbucks shops on Jeju Island.

Meanwhile, coffee franchise insiders are curious to see if Starbucks' strategy will help it to achieve its first ever 2 trillion won in sales here.

Last year, Starbucks Korea recorded 1.86 trillion won in sales, up by 22.8 percent compared to that of the previous year.

However, some business watchers have expressed the outlook that the prolonged COVID-19 pandemic has struck Starbucks' second-quarter sales so hard that it will be unlikely for the chain to be able to set any new sales records any time soon.