Sip, Relax, Repeat: Starbucks Creates a Buzz in KSA's Cafe and Coffee Chain Market: Ken Research

Starbucks has established a strong presence in the Saudi Arabian cafe and coffee chain market. Its brand recognition, consistent quality, and adaptation to local preferences have contributed to its success in the country.

STORY OUTLINE

Starbucks Success in Saudi Arabia: Strong presence and brand recognition in the Saudi Arabian cafe and coffee chain market.

Strategic Placement and Market Share: Starbucks strategically places outlets in high-traffic areas, holding over 50% of the chained cafe market share in Saudi Arabia alongside Dunkin' Donuts.

Loyalty Programs Drive Engagement: The Starbucks Reward Loyalty Program boasts 16 million active members, contributing 40% to sales and resulting in a ~10% increase in same-store sales.

Alignment with Saudi Vision 2030: Starbucks invests in employees and new store openings, including the debut of the first Starbucks Reserve store in Jeddah, reinforcing its commitment to growth and being the preferred choice for coffee lovers.

Financial Performance and Recognition: Achieved a net revenue of approximately $25 billion in 2022 and recognized by the Saudi Ministry of Culture for contribution to the success of the 2022 Year of Saudi Coffee.

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1. Strategic Placement: Starbucks Sets Up Shop in High-Traffic Areas

Starbucks adopts a strategy of establishing outlets in larger cities, which serve as centralized facilities or hubs. These hubs provide logistical and managerial support that enables Starbucks to efficiently expand into nearby smaller cities and suburban locations. By leveraging the operational infrastructure of these hubs, Starbucks can rapidly extend its presence and reach a broader customer base.

The densest clusters in Riyadh are Al Olaya, Al Mathara, Al Sulmaniyah where 8 Starbuck Outlets are present in close proximity and most of the Starbucks locations are very well positioned near corporate hubs.

In 2022, Starbucks together with Dunkin donuts held a combined market share of over 50% in the chained café market.

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2. Sip, Earn, Repeat: The Evolution of Starbucks' Game-Changing Loyalty Programs

The Starbucks Reward Loyalty Program boasts a staggering active membership of ~16 million users as of March 2019.

Approximately 40% of Starbucks' total sales can be attributed to the Rewards Program, showcasing its significant impact on the company's financial performance.

The program has proven successful in driving a notable ~10% increase in same-store sales, indicating its effectiveness in boosting customer engagement and loyalty.

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3. Coffee Kingdom: Starbucks Hits 400 Store Mark in Saudi Arabia

Starbucks Aligns with Saudi Vision 2030, making substantial investments in its employees and new store openings, including the debut of the first Starbucks Reserve store in Jeddah on May 4th, 2023.

Starbucks underscores its dedication to becoming the preferred choice for coffee lovers in the Kingdom, as evidenced by its expansion plans and ongoing growth momentum in the region.

The Saudi Ministry of Culture acknowledged Starbucks as a significant contributor to the success of the 2022 Year of Saudi Coffee. Additionally, Starbucks achieved a net revenue of ~25 billion U.S. dollars in 2022, reflecting a notable increase compared to the previous year's total.

In conclusion, Starbucks has made a significant impact on the cafe and coffee chain market in Saudi Arabia, with a strong presence, strategic placement of outlets, and a game-changing loyalty program. By aligning with Saudi Vision 2030 and achieving remarkable financial performance, Starbucks continues to shape the coffee culture in the Kingdom and cement its position as the preferred choice for coffee lovers.

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Ken Research is a Market Research and Consulting Firm, based out of India, Indonesia and UAE. Since 2011, we have been assisting clients globally with our Syndicate and Bespoke Market Research and Advisory Services.

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