Starbucks hits the breaks in South Africa

Starbucks has decided to cut its expansion plans in South Africa. The US coffee giant is not opening new shops, as the company is struggling to control its operating costs.

Africa News reports that Starbucks opened its first store in Johannesburg in April 2016. Since the opening, local licensee Taste Holdings has opened 12 Starbucks coffee shops in Johannesburg, Pretoria and Durban. Plans to open 45 stores by 2020 (with a target of 150 stores) in South Africa may have to be suspended, as operating costs for Starbucks’s food divisions went up by 7% last August.

Starbucks also suffers from competition from brands that target middle-class consumers such as Bean There and Father Coffee, selling coffee for a price as low as $1.50 (Starbucks price: $2). On the African continent, Starbucks is only present in South Africa, Egypt and Morocco. 

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