Why Can’t Starbucks Crack the New Zealand Coffee Market? – Fortune

Starbucks’s partner of 20 years in New Zealand is hanging up its apron.

Restaurant Brands New Zealand Ltd. is letting its licensing deal expire in October to focus on its core fast food operations with chains such as KFC and Pizza Hut. Tahua Capital picked up the domestic Starbucks business for up to NZ$4.4 million or $2.9 million.

Over the years, Starbucks’ retail footprint in New Zealand had shrunk from 50 to 22 stores. In Australia, the number of stores has been shaved down from 85 to 34.

Why is Starbucks (sbux, +0.64%) having such a hard time in that region of the world? It’s certainly not because of any lack of coffee lovers down under. In fact, it’s likely due to the strong domestic coffee culture. Starbucks’s main target audience in New Zealand is tourists and students—people looking for familiarity and convenience—rather than locals who are after the perfectly pulled espresso shots. 

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