What’s next? Starbucks unveils long-term growth strategy for a limitless future
Starbucks hosted an investor forum in New York City today to update our shareholders on the status of the company’s Reinvention and to share our long-term ambition and strategies as we move toward a limitless future.
Starbucks hosted an investor forum in New York City today to share the company’s Triple Shot Reinvention with two pumps plan, providing details of our strategic priorities for long term growth.
This strategy is the next step in the refounding of Starbucks.
Six months after taking over the reins as chief executive officer, Laxman Narasimhan has built on Starbucks heritage by unveiling an updated mission grounded in human connection, six key promises to stakeholders and a set of values to guide the company’s 450,000 green apron partners around the world.
How We Got Here
- Our Reinvention plan was launched in September 2022 to reset the business for greater long-term success. We focused on elevating the experiences in our stores, for our partners and our customers.
- We have strong, early momentum on every key metric of our Reinvention plan, as evidenced in the Q4 and fiscal year 2023 record earnings results.
- Based on prevailing trends, we set strong guidance for fiscal year 2024 to grow comps 5-7 percent, with revenue growth at the low end of the 10-12 percent range and earnings growth of 15-20 percent, reflecting our confidence in the multiple paths we have to deliver double-digit revenue and earnings growth.
Bottom line: Starbucks has limitless opportunities to grow and nurture human connections over coffee. But to achieve what is limitless, we will continue to address what limits us. Therefore, Starbucks executives today unveiled details of a long-range plan called Triple Shot Reinvention, with two pumps to deliver significant long-term shareholder value.
- Elevate the brand through running better stores, growing the portfolio with more purpose-defined stores and accelerated renovations, and driving further product innovation.
- Strengthen and scale digital by doubling its 75 million global Starbucks Rewards members within five years and expanding digital and technology collaborations to elevate the partner and customer experience.
- Become more global by accelerating store expansion to 55,000 globally by 2030.
- Unlock efficiency to generate $3 billion in savings over three years – with $2 billion outside the store – to deliver returns to shareholders through margin expansion and earnings growth.
- Reinvigorate the partner culture through the rollout of the mission, promises and values and through continued investments in the partner value proposition across the partner experience.
Five Takeaways from Investor Forum
1. We are elevating the brand by making significant investments in our U.S. store operation and equipment, while also innovating around our core products. Starbucks has seen average weekly sales outpace pre-COVID levels by double digits, proving there is demand for even more stores beyond the 17,800 currently located across North America.
What’s Next: Renovating existing stores and building new purpose-driven stores in various formats – pick-up, drive-thru only, double-sided drive-thru, and delivery-only – to meet customer demand. Tripling the number of Greener Stores in three years. Scaling solutions like the Siren System to empower partners to do their jobs more efficiently. Further tapping the power of our analytics to understand consumer demands and innovating afternoon and all-day food options, including more healthy, premium snacks.
2. Starbucks is strengthening and scaling in digital to create meaningful connections – and accelerate growth. Today, there are more than 75 million Starbucks Rewards members globally. Super fans run digital communities (such as Leaf Rakers Society on Facebook) to share their love for the brand. With more than 38,000 locations and 22 percent of global sales coming through digital channels, Starbucks continues to leverage and build our tech capabilities, including our Deep Brew AI and machine learning.
What’s Next: We expect to double the number of Starbucks Rewards members in the next five years. Continuing our rewards partnership with Delta and expanding to additional partnerships in the financial and hospitality sectors. Releasing features more frequently to help partners and store operations run more smoothly. Promising new collaborations with tech pioneers like Microsoft, Apple and Amazon.
3. Starbucks has always been an international company, but we’re on the cusp of becoming truly global. There are now more than 20,000 Starbucks stores outside the U.S. and the company is deploying omni-channel strategies in the 86 markets where we operate. Through a five-year partnership with Nestlé, Starbucks is now the market share leader in U.S. at-home coffee and is growing significantly internationally. The global ready-to-drink business continues to rapidly innovate and accelerate alongside strong partners like PepsiCo, Dongsuh Foods, Suntory and Arla. And with the pandemic behind it, Starbucks China is poised for massive growth and on track to operate 9,000 stores in China by 2025. Since 2019, the store network there has expanded by 65 percent to more than 6,800 stores in 800 cities – offering a full spectrum of experiences that are unique to the market at a time when the specialty coffee industry is still in its initial stages.
What’s Next: Expanding store footprint to 55,000 by 2030, growing on average of eight stores per day. International will play a critical role, fueling nearly one-third of our earnings growth potential over the long term. Store growth will be bolstered by strong unit economic expansion, underpinned by the extension of our digital platforms to all our licensed partners globally. Emerging markets also present a significant opportunity – today we are only 19 percent penetrated in fast growing markets like India, Southeast Asia and Latin America with a 10,000-plus store opportunity remaining. Three out of every four new stores over the near term are expected to be opened outside of the U.S.
4. We are becoming more efficient. Over the past twelve months, our focus and discipline around our Reinvention has driven tangible financial results and unlocked capital for us to reinvest back into our business. Hourly turnover is now below pre-pandemic levels, creating a more consistent partner experience across the 9,600 company operated stores in the U.S.
What’s Next: Exciting new partner experience enhancements are coming, based on feedback from our partners. We will implement a $3 billion efficiency program, $2 billion outside the store in cost of goods sold, to both reinvest in the business and to deliver returns to shareholders through margin expansion and earnings growth.
5. Lastly, and perhaps most important to the foundation of the Starbucks brand, we will reinvigorate the partner culture at Starbucks. This starts with continuing the process of refounding the company with our partners, guided by our updated mission, promises and values. It’s important to emphasize that we are not starting from the ground up. Rather, we are building on a long, rich heritage that has endured for more than 50 years. Throughout his global travels and during his unique immersion (which included many store visits and barista training), ceo Laxman Narasimhan came to see firsthand how art, architecture, beauty and design are central to the ethos of Starbucks. As a result, the company is announcing the establishment of many initiatives to uplift the culture via our 38,000 stores worldwide.
- The Starbucks Annual Art Prize will celebrate inspiring, emerging artists who represent craft, courage, belonging, and joy.
- Five architecture prizes will be given to emerging talented architects who we will contract to design and build unique and distinctive stores.
- We have also announced Starbucks Scouted inside the company to highlight the artistic music and creative talents of our retail partners.
“I truly believe that we have a rock-solid foundation from which to build significantly, to reimagine the ‘third place’ for more people, in more places, at more times of day, in more ways than just in the store, and to build more human connection at a time when we need it more than ever.”
LAXMAN NARASIMHAN, CEO OF STARBUCKS
Our Mission
With every cup, with every conversation, with every community – we nurture the limitless possibilities of human connection.
Our Promises
- To our Partners, we promise a bridge to a better Future.
- To our Customers, we promise to uplift the everyday.
- To our Farmers, we promise to ensure the future of coffee for all.
- To our Communities, we promise to contribute positively.
- To our Environment, we promise to give more than we take.
- To our Shareholders, we promise to generating long-term returns.
