Starbucks is planning its biggest programme of store openings in Britain next year as it looks to allay fears of a slowdown in the United States by accelerating its expansion overseas.

Howard Schultz, the group’s founder and chairman, told The Times yesterday that at least 100 outlets would open across the UK and Ireland in 2008 – 25 per cent more than this year – taking the total to 725.

He added that he believed that the British coffee shop market – already worth more than £1.3 billion – was still in its infancy, with far more growth to come.

Starbucks recently began a trial running outlets in nine Tesco supermarkets and plans to roll out more if the concept is a success.

Mr Schultz said: “We are coming off a record year for the UK, the fifth consecutive year of high single-digit like-for-like sales growth. It’s been quite impressive.

“We are excited and bullish about the UK market. We think it has the potential to be much larger than people think and is growing at a rate that will give us more stores than we originally thought we would have. I’m not sure anyone thought we would get to 600.”

Costa, its biggest competitor, has more than 500 British stores, and Caffè Nero more than 330.

Mr Schultz’s comments came a week after shares in Starbucks plunged as much as 7 per cent as the coffee chain cut its earnings forecasts for 2008 and revealed that American sales had fallen for the first time.

The warning sparked fresh fears over the the future growth of Starbucks in the United States, where it operates more than 10,000 stores and faces growing competition from rivals including McDonald’s and Dunkin’ Donuts.

Mr Schultz said that the reaction on Wall Street to the group’s outlook was a “case study in overreaction” and pointed out that Starbucks had announced a 35 per cent growth in profits in last week’s fourth-quarter results. No separate figures are provided for Britain.

“There have been significant cost pressures in the US and, coupled with the softening in the US economy, we felt the most responsible thing we could do is provide more conservative guidance for 2008,” he said.

“We have seen for the first time a softening in US traffic, but again that is very, very consistent with the majority of retailers and restaurants in America. People talk about saturation, but we only account for 10 per cent of coffee consumption in North America and 1 per cent around the world – that still leaves a very big pie.”

However, Mr Schultz, who founded the group in Seattle in 1971, admitted that Starbucks was aware of the need to innovate to ensure that it keeps ahead of mounting competition. In a leaked memo in February, he told directors that decisions made to accommodate the company’s growth had led to a “watering down” of the brand.

In America 100 fewer stores than expected will open next year but the group has begun its first national television advertising campaign.

In Britain this Christmas, customers will see a range of new baked products and Starbucks is also considering whether to sell a bottled frappuccino coffee drink in supermarkets after the success of the product in China.

Counting the beans

41
countries with Starbucks stores outside the United States

6,566
company-owned stores in the US

3,729
licensed US stores

30
blends and coffees available

1992
Starbucks listed on Nasdaq at $17. They were $22.89 yesterday

Source: Starbucks

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