With almost as many U.S. locations as McDonald’s, Seattle-based Starbucks may have finally saturated the market. CBS News reports that the chain expects to close 150 underperforming stores next year, up from the usual rate of 50 store closures per year.
“Starbucks now operates about 13,900 locations in the U.S., putting it within sipping distance of the 14,400 restaurants operated by McDonald’s,” the story reports. “In the past year, Starbucks has opened almost 1,000 new stores in the Americas, which includes the U.S., Canada and Latin America. One analyst estimates that new stores may be cannibalizing traffic from existing stores, potentially diverting 1 out of 7 transactions.”
Meanwhile, competition appears to be heating up from McDonald’s, Dunkin’ Donuts and others. The report quotes a research note from Bernstein analyst Sara Senatore in which she writes: “Intensified competition in the slushy coffee category is exacerbating the shift towards health and wellness weighing on Frappuccino demand. Starbucks will focus on Teavana drinks and other more healthful options in its core offering, which it views as ‘more differentiated.'”