File Photo/NBD

Starbucks, the world's leading coffee maker, on Wednesday, reported strong financial results for the first quarter of fiscal year 2024.

Net revenues for the quarter were $9.4 billion, up 8% from the same quarter a year ago. Same-store sales increased 5%, driven by a 3% increase in transactions and a 2% increase in average ticket.

In China, Starbucks' net revenues for the quarter were $735 million, up 18% from the same quarter a year ago. The company opened 1,024 new stores in China during the quarter, bringing its total store count to 6,975.

Starbucks China's Chief Financial Officer Rachel Ruggeri attributed the company's revenue growth in China to two factors: new store growth and same-store sales growth.

NBD also noted that active members are now a major driver of Starbucks' revenue. During the quarter, Starbucks China's Gold members' spending frequency increased by nearly 10% from the previous quarter. Member sales accounted for 73% of total sales.

Starbucks is committed to growing its business in China. The company said that it expects to have more than 9,000 stores in China by 2025.

Starbucks is betting that its growth in China will come from the lower-tier markets. Many of the Chinese tea drinks and coffee brands that are competing in the lower-tier markets are using franchising to ensure their rapid expansion. Starbucks has made it clear that it has no intention of engaging in a price war and that it wants to be the "preferred brand in the premium coffee market."

In fact, Starbucks does not lack the funding to open company-owned stores. However, as chief consultant of Lingyan Management Consulting Lin Yue told NBD, "Starbucks' biggest challenge is how to maintain its leading position through product and service innovation."