Starbucks Is Shrinking Its Corporate Footprint in Europe, a Market It’s Still Trying to Crack
Starbucks (SBUX) is selling 83 company-owned stores in France and the Netherlands to its longtime Mexican partner, Alsea SAB (ALSSF). Alsea will also provide services to 179 other Starbucks locations owned by franchisees in France, the Netherlands, Belgium and Luxembourg. Alsea, a Mexico City-based fast food operator, already runs 900 Starbucks outlets across Latin America.
Starbucks plans to close an office in Amsterdam and consolidate its European headquarters in London, which is also being restructured. The closure will impact 186 employees, who will be encouraged to apply to open jobs in London. Starbucks will retain a roasting plant in the Netherlands that employs about 80 people.
The deal is similar to the one Starbucks struck in 2016 to sell its 144 German stores to AmRest. Madrid-based AmRest was already Starbucks’ exclusive licensed partner in the Czech Republic, Hungary, Poland, Romania, Bulgaria and Slovakia. It also operates Pizza Hut, KFC and Burger King locations across Europe.
Europe has been a tough nut for the Seattle company to crack. Starbucks said that between 2008 and 2016 it built more than 260 stores in the four European markets affected by the deal with Alsea. Starbucks just recently opened its first cafe in Italy, a magnificent roastery in a historic building in Milan, but it’s understandably hard to sell American espresso to Italians.
Starbucks offloaded its consumer goods business to Nestle for $7.15 billion earlier this year, sending the Swiss food conglomerate about 500 of its employees.
Amid Starbucks’ European downsizing, the company is facing increasing competition on its home turf. Starbucks is undergoing an organizational restructuring, including cutting jobs and costs, as CEO Kevin Johnson is focusing his attention most on the U.S. and Chinese markets.
Starbucks is opening a new store in China every 15 hours. It has about 3,500 locations in mainland China and plans to build 600 new stores there every year for the next five years.
Clarification, Oct. 19, 2018: This story has been updated to make clear that Starbucks’ company-owned operation in Europe is shrinking. As part of the deal with Alsea, the number of Starbucks stores in Europe will remain constant.