Starbucks China sees 14% dip in Q1 sales

The coffee giant’s global CEO acknowledged the impact of soaring inflation, higher worker costs and the impact of the Omicron variant on the business.

Starbucks reported higher quarterly profits but saw lower sales in China, its second biggest market, feeling the impact of the country's "zero-COVID policy.”

The coffee giant’s latest quarterly earnings report said comparable store sales in China declined 14%, driven by a 9% dip in average ticket and a 6% decline in transactions.

This is despite Starbucks China currently standing at 5,557 stores, pushing the chain’s global store count to a record 34,317. Combined with the United States’ 15,500, both markets comprised 61% of the company’s global portfolio at the end of the first quarter of their 2022 fiscal year.

International comparable store sales dipped 3%, driven by a 5% decline in average ticket, and partially offset by a 2% increase in comparable transactions.

Starbucks’ global revenue rose 19% to US$8.1 billion in its fiscal first quarter but acknowledged the impact of soaring inflation, higher worker costs and the impact of the Omicron variant on the business.

"We experienced higher-than-expected inflationary pressures, increased costs due to Omicron and a tight labor market," president and CEO Kevin Johnson said in the chain’s media release. "We remain focused on actions that drive both top and bottom line growth, including industry-leading investments to attract, train and retain the best talent for our stores as customer occasions increase."

Just last month, the company announced customers in China can now access the company's mobile order and delivery service, Starbucks Delivers, on Meituan platforms market-wide.