Starbucks unveiled its latest growth strategy on Thursday, focusing on expanding its global presence and reducing costs by $3 billion over the next three years.
The company announced its goal to extend its worldwide reach to 35,000 locations outside of North America by 2030, aiming to build on its current count of approximately 20,200 international cafes as of October 1. In total, Starbucks is planning to achieve 55,000 locations globally by 2030, a significant increase from its current 38,000+ count.
Michael Conway, President of Starbucks’ International and Channel Development Divisions, shared that “three out of every four new stores over the near term is expected to be opened outside of the U.S. as our store portfolio becomes increasingly global.”
In addition to expanding its global footprint, Starbucks introduced a $3 billion cost-saving initiative. The company’s executives detailed that $1 billion of these savings will result from making its stores more efficient, while the remainder will come from reductions in the cost of goods sold.
The third component of Starbucks’ “Triple Shot Reinvention Strategy” involves boosting the wages of its baristas, aiming to double their hourly income by the end of fiscal 2025 compared to their earnings in fiscal 2020. This increase will come from both extended working hours and higher pay rates. Starbucks has promised to provide more specific details next week.
This announcement comes amid more than 350 Starbucks locations having unionized under Workers United, with ongoing collective bargaining negotiations and accusations of labor law violations. Starbucks disputes the allegations of union busting.
Starbucks reported favorable fiscal fourth-quarter results earlier on the same day, surpassing Wall Street’s expectations for both quarterly earnings and revenue, leading to a 9.5% surge in its stock price. The company’s “reinvention” plan, unveiled last September, is ahead of schedule, driving sales and operational efficiency. Starbucks is addressing challenges such as increasingly complex drink orders, growing demand for cold beverages, and the need for faster service, particularly through mobile apps and drive-thru lanes.
The company’s former CEO, Howard Schultz, initiated the reinvention plan to streamline operations and enhance service quality and speed. The strategy incorporates new coffee-making equipment, store formats, and increased automation.
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At its investor day in September, Starbucks projected annual earnings per share growth of 15% to 20% over the next three years and annual same-store sales growth of 7% to 9%. While the company’s same-store sales outlook for fiscal 2024 falls slightly short of that range, the rest of its forecast for the next fiscal year aligns with those targets.