Starbucks sees fortunes improve in challenging Australian market

A Starbucks store in Melbourne, Australia | Photo credit: Kevin Laminto

Starbucks Australia CEO Chris Garlick has said the coffee chain now has the ‘right size and scale’ to accelerate expansion as it prepares to open its first stores in Perth before the end of the year. 
 

Speaking to The West Australian, Garlick said Starbucks’ expansion to western states for the first time comes amid ‘latent, built-up demand’ for the US brand.  

Starbucks Australia, which currently operates 72 stores across the states of Victoria, New South Wales and Queensland, is seeking to open an initial 12 drive-thru stores in suburban Perth over the next six months and has a further nine sites in the pipeline for early 2025. 

“Starbucks has been resonating well on the east coast and we feel it will do the same on the west coast,” Garlick said. 

The move is a further indication of Starbucks’ improving fortunes in Australia and comes less than a year after the coffee chain achieved its first profit in the country. 

Seattle-based Starbucks entered Australia in 2000 with an outlet in Hyde Park, Sydney. The coffee chain scaled to 80 stores before closing two-thirds of its sites in 2008 after significant losses. 

Its remaining 24-store network was acquired by Melbourne-based in 2014 by The Withers Group, which outlined its goal to ‘make Starbucks the most successful coffee chain in Australia’. In December 2023, The Withers Group sold its 750-store 7-Eleven convenience store chain to parent company, 7-Eleven International, for AU$1.7bn ($1.1bn). 

Although branded coffee chains haven’t typically fared well in artisan coffee-loving Australia, several operators have successfully scaled their operations with a focus on convenience and affordability. 

In July 2022, fast-food chain Hungry Jack’s launched its Jack’s Café brand to capitalise on Australian demand for drive-thru coffee – a market dominated by value-focused McCafé with over 1,000 sites. Hungry Jack’s, which trades as Burger King in the rest of the world, has rolled out over 400 Jack’s Café outlets and invested $20m into state-of-the-art coffee equipment and rigorous staff training. 

Also targeting the drive-thru coffee shop market, Queensland-based Zarraffa’s Coffee is seeking to scale from 76 outlets to 130 by 2026, while the beer, wine and spirits retailer BWS launched a new drive drive-thru coffee concept, Double Shot, in Tasmania in January 2023 to fill a perceived void in Australia’s on-the-go coffee market. The business has mooted a new site in Melbourne but has yet to expand the concept. 

Additionally, highlighting opportunities for convenience-operators in the country, New South Wales-based Soul Origin reached 150 stores in December 2023 after rapidly scaling its shopping centre and transport hub network, while fast-growing Chinese coffee chain Cotti Coffee entered the market in February 2024 with a take-away only site in Sydney.