The company crosses the pond, again, in an attempt to caffeinate the UK.
A version of this article originally appeared on our US site, Fool.com.
The Financial Times is reporting that coffee purveyor extraordinaire Starbucks (NASDAQ: SBUX.US) is planning to open 300 new outlets in the U.K. over the next five years, bringing the nationwide total to 1,000. The company will hire 5,000 new people in the process.
After an aggressive expansion in 2008 that backfired badly, and food and drink retailers around the world literally closing up shop in the face of curbed consumer spending and rising soft-commodity prices, the question for Starbucks is: Why now?
Cup 'o coffee, luv?
Starbucks' new trans-Atlantic adventure is underpinned primarily by a very simple set of facts: The company's U.K. sales have grown for nine straight quarters in a row. That's hard to argue with.
In addition, many of the new outlets will be in the Midlands and northern England. The company cites research showing consumers in these areas of the country think coffee on the road is very poor and are now "demanding the same quality they know from the High Street" .
To this point, 200 of the new stores will be drive-throughs. According to Kris Engskov, Starbucks' new managing director for the U.K. and Ireland: "Customers told us that they now expect the best possible coffee wherever they are, and the success of our first drive-through stores shows that this is a huge opportunity."
Leadership counts
The other X-factor behind Starbucks' decision to return to the U.K., and the one that makes the strongest argument for its success, is CEO Howard Schultz. The previous attempt at expansion was in motion before he had returned to the helm of the company he had founded. Since his return, most everything he's touched has turned to profit.
Management can make all the difference in the success or failure of an enterprise, hence investor worries when singular leaders such as Steve Jobs and Bill Gates leave the scene. History shows that these worries aren't unfounded. Starbucks is lucky to have Schultz back.
God save the latte machine
This move will also create 5,000 jobs at a time of high unemployment, particularly among the young, which most of Starbucks' baristas are. And there's certainly nothing wrong with making money and making a difference, something the company is known for on many economic fronts.
And while there's always McDonald's (NYSE: MCD.US) to contend with, the Golden Arches don't typically go toe-to-toe with Starbucks, and the two companies aim for different demographics. Dunkin' Brands (NASDAQ: DNKN.US) may return to the U.K. eventually, after having to close down underperforming outlets in the past, but for now Starbucks has a relatively clear run.
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