Starbucks is facing increased competition in China, particularly from upstart Luckin Coffee, but CEO Kevin Johnson remains optimistic about its long-term success.
Starbucks CEO Kevin Johnson said Friday that the company's rivals are focusing on short-term gains, while Starbucks is pursuing a more sustainable plan for growth.
Luckin Coffee, the Seattle-based company's primary challenger in China, is competing for customers by focusing on convenient pick-up and discounted drinks. The company recently filed for an initial public offering on the Nasdaq. In its filing to go public, Luckin said that it expects to continue to invest heavily in discounts and deals.
Starbucks shares were down 1% Friday morning after the company reported second-quarter results. While Starbucks' earnings beat estimates, sales fell slightly short of Wall Street's expectations. Same-store sales growth of 3% in China beat estimates, but traffic to those locations once again declined.
"We are not only driving the transaction growth and engaging new customers, but we are also generating the return on invested capital that we believe is sustainable to continue to build new stores at this rate for many, many years to come," Johnson said.
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