Starbucks CEO Howard Schultz Says He's Not Afraid of Dunkin' Donuts
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On the heels of strong earnings and plans for expansion from coffee competitor Dunkin' Brands, Howard Schultz, chairman and CEO of Starbucks, told CNBC that he isn't worried about competition from other big brands edging into coffee service.
"We respect all of our competitors, but I think Dunkin' and McDonalds, they're in another business, they're in the fast-food business," Schultz said on "Squawk on the Street" Friday.
On Thursday, Dunkin' Brands announced plans to open its first stand-alone stores in Southern California by 2015, with some "non-traditional" Dunkin' Donuts shops opening in the next few months. The company expects to have 200 stores open in California by 2020, after leaving the state in 2012.
However, Schultz said that he doesn't think "there's anything that Dunkin' is going to do" to challenge Starbucks operations in the state. "California, in a sense, is almost Starbucks' largest country, with almost 3,000 stores," he added. "We're still opening stores in California. California is one of the strongest regions for the company."
"I'm not losing any sleep over Dunkin Donuts."
Schultz has also laid out plans for "at least" 1,000 Teavana stores in North America over time, with the first location opening on the Upper East Side of Manhattan this fall. "We think we have a global opportunity with Teavana," he said.
One of the highlights from Starbucks' third-quarter earnings report was strong growth in same-store sales, rising 8 percent globally, including 9 percent in the Americas and 9 percent in China and Asia Pacific.
"I really feel the company is firing on all cylinders," he said. However, "it would be irresponsible for any of us at Starbucks to indicate to the Street that we can replicate 9 percent comps again. It's just a stunning level of performance for the company."
In addition, Schultz expects that Starbucks' long-term growth will be based on an evolution of new brands and categories, leveraging the company's global footprint as well as its rewards programs and strength with mobile purchases.
However, he said that no one should misunderstand his goals for growth, "we are a coffee company ... We're creating adjacent opportunities to create long-term growth and long-term value for our shareholders. The foundation of the company is that we are a coffee company first."