Starbucks unveiled aggressive growth plans at its 2022 Investor Day event in Seattle.
The coffee giant said it plans to add 2,000 net new stores in the U.S. by 2025, diversifying its brick-and-mortar portfolio across cafes, pick-up stores, drive thru-only, and delivery-only locations to meet “customers whenever and wherever they want, the company said.
In addition, next year, Starbucks will invest $450 million to modernize its existing stores in North America with new equipment and technology that enable greater efficiency and reduced complexity for store employees.
Outgoing group president, North America and COO John Culver said that Starbucks is now at a moment that challenges it to reinvent and think differently.
“Our partners have come to expect more from us,” he said. “Our customers have come to expect more from us. And it is clear our physical stores must modernize to meet this moment.”
The modernization, part of Starbucks’ reinvention strategy, comes as Starbucks’ business has evolved in recent years to include a greater emphasis on cold drinks. (Cold drinks now account for about 60% of the company’s year-round sales and 80% of summer sales.) Requests for customizations have also risen dramatically in recent years with two in three drinks now being customized with various add-ons. And many customers now order through the Starbucks app.
“When we think about our existing store portfolio and our investments, they must deliver in a few critical areas,” said Culver, including “reducing the level of complexity and making work easier for our partners.”
Added Starbucks executive VP and chief marketing office Brady Brewer:
“As we drive even more demand ahead, we are enabling our stores to handle even more capacity, while significantly reducing the effort required from our partners.”
The new equipment will include such updates as a dispenser system that reduces the time it takes employees to create the brand’s Mocha Frappuccinos from 86 seconds to 35 seconds. It also is rolling out ways of brewing hot coffee and cold brewed coffee that are not as labor intensive as current methods.
The effort to streamline beverage operations comes as Starbucks is facing a union drive, with employees becoming increasingly vocal about their dissatisfaction concern working conditions. Since last year, 236 of Starbucks' approximately 9,000 company-owned U.S. locations have voted to unionize.
"The reality is, we have a trust deficit with our partners,” Frank Britt, Starbucks’ executive VP and chief strategy officer, said at the event. “The work we do in our stores today is too physically hard.”
On Sept. 12, the day before the investor conference, Starbucks announced it is following up on a commitment of $1 billion it made to improve wages, training and stores in May 2022 with a set of offerings designed to support eligible employees in two areas of financial well-being: savings and student loan debt.
The company also is moving forward with plans to establish a strong foothold in the emerging metaverse. The new Starbucks Odyssey offering will provide Starbucks Rewards members and employees in the U.S. the opportunity to earn and purchase digital collectible NFT assets that will enable access to new benefits and immersive coffee experiences.
Earlier this month, Starbucks announced that Laxman Narasimhan will join the company as incoming CEOon October 1. He will work closely with interim chief Howard Schultz before taking the reins and joining the board on April 1, 2023.