Triple Shot Reinvention will focus on three priorities:
elevating the Starbucks brand; strengthening the company’s digital
capabilities; and becoming truly global; customized with “two
pumps” unlocking efficiency and reinvigorating partner culture.
This includes:
- Elevating the brand through better run stores, growing
the portfolio with more purpose-defined stores and accelerated
renovations, and driving further product innovation.
- Strengthen and scale digital by doubling its 75M 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 $3B in savings over three
years – with $2B 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.
Starbucks Coffee Company (NASDAQ: SBUX) today announced its
long-term growth strategy, Triple Shot Reinvention with Two Pumps,
to elevate the brand, strengthen and scale digital, further expand
globally, identify opportunities within and outside the store for
efficiencies, and reinvigorate the partner (employee) culture. The
strategy builds on the significant business momentum from the past
year, while laying out a roadmap for how the company will deliver
long-term, sustainable growth and outsized returns to partners,
customers, and shareholders.
“I am immensely proud of the work we have done so far in
reinventing and re-founding the company for its next phase of
growth. I am excited about our multiple paths to revenue growth and
earnings, which should give you confidence in our ability to meet
our goals,” said Laxman Narasimhan, chief executive officer of
Starbucks as part of the company’s presentation to investors in New
York City. “I am honored to be leading this talented group of over
450,000 green apron partners, including this executive leadership
team, to deliver human connection more broadly around the world for
the benefit of us all.”
Starbucks plans for Reinvention were first introduced by founder
Howard Schultz at the company’s Investor Day in September 2022,
resetting the business to elevate the in-store experience for
partners and for customers and is seeing strong early momentum on
every key metric.
With an updated mission and an evolved set of promises and
values, the Triple Shot Reinvention with Two Pumps is the next step
in the re-founding of the company. Starbucks will deliver
significant value to partners, customers and shareholders by:
- Elevating the brand
- Strengthening and scaling digital
- Becoming truly global
These strategies are customized with two enabling “pumps” which
will:
- Unlock efficiency, and
- Reinvigorate the partner culture
Elevating the Brand Through Better Run
Purpose-Defined Stores and Continued Product Innovation
With the U.S. store count slated to reach more than 16,300 –
with a 4 percent net new store growth planned in FY24 and an
aspiration to reach 20,000 over the long term – the company will
leverage the vast channels available to meet the evolving needs of
customers and further elevate the brand. Starbucks will focus on
running better stores through a stronger operating
foundation.
The company will grow the portfolio with more purpose-defined
stores and accelerated renovations. “We see an opportunity to
better leverage our footprint to serve the evolving needs of our
customers. Innovation in our store formats, to purpose defined
stores like pick-up, drive-thru only, double-sided drive-thru, and
delivery-only allows us to better meet our customers where they are
at through differentiated experiences,” said Sara Trilling,
executive vice president and president of Starbucks North America.
“To capture that demand we will build more new stores – with new
formats, in new cities and cities we’re already in. To be clear,
Starbucks has not saturated the U.S. market.”
Additionally, the brand will be elevated through further
product innovation. The company will continue to grow coffee
and its core menu through customization and personalized marketing
– adding popular beverage innovations to the core line up – which
now accounts for 85 percent of net beverage sales. The company will
also drive innovation through two specific areas of focus: targeted
dayparts and growing food attach with all-day breakfast and all-day
snacks.
Strengthen and Scale Digital
Capabilities
Starbucks also unveiled a new phase in the acceleration of its
digital flywheel. Strengthening its digital leadership with a
strategy aimed to:
- Double global Starbucks Rewards with another 75 million
members – the company’s most frequent customers – within the
next five years.
- Building on its highly successful program with Delta Airlines,
the company also intends to extend the benefits that Starbucks
Rewards provides to existing and new customers with additional
‘Rewards Together’ partnerships – with a financial institution
and a hospitality partner – within the next 6 months.
“Starbucks has direct, digital relationships with hundreds of
millions of customers,” said Brady Brewer, executive vice president
and chief marketing officer. “Our ambition is to know every
customer, personalize their experience and make Starbucks
effortless. We have a clear and compelling roadmap, the
acceleration has already started, and we will extend our digital
leadership globally.”
In addition to extending its digital and tech leadership through
personalization and customization, the company is resetting its
tech architecture, accelerating the introduction of new features,
building on its distinctive Deep Brew platform capabilities.
Starbucks also announced three new technology collaborations it
intends to execute in order to enhance the customer and partner
experience:
- The partnership with Microsoft will extend through
collaboration in its innovation lab to marry industry leading
generative AI capabilities to take product development and
personalization to the next level.
- Collaborating with Apple products in our first Green
Apron Innovation store to experiment and refine technology to
assist partners across the globe.
- Reimagining the customer in-store experience with
Amazon One and Just Walk Out technology.
Becoming Truly Global
The company also announced a plan to expand its global store
footprint to 55,000 by 2030 – an average of 8 new stores a
day and bolstered by further expansion of digital platforms across
all licensed partners globally.
“Over the past five years, we have opened 9,000 stores – 7,000
of which were outside of the U.S.,” said Michael Conway, group
president, International and Channel Development. “We will become
truly global as we create the surround sound of omni-channel
strategies in the 86 markets where we sell Starbucks Coffee.”
Starbucks China is uniquely positioned to support the growth
opportunities the market presents. The business will continue
driving comps in existing stores through global and locally
relevant innovation across dayparts and across channels in
beverages and food. Additionally, Starbucks will continue to invest
in the expansion of Starbucks Rewards. The company also
believes there is significant headroom in new store expansions with
attractive returns, including continuing to infill existing
cities with purpose-defined store formats, while entering more new
county cities. Finally, Starbucks will continue to invest in
digitalization across supply chain and store operations that fuel
productivity and efficiency, while driving innovation with
customers, partners, coffee and sustainability.
“We just concluded a watershed year in China, where we put the
pandemic behind us, and built growth momentum for the future,” said
Belinda Wong, chairwoman and co-ceo of Starbucks China. In
commenting on the overall international business, Wong noted that
the omni-channel strategy “gives us great confidence and high
ambition for our international business, fueling nearly 1/3 of the
earnings growth potential of Starbucks over the long-term.”
Unlocking Efficiency
The company continues to experience the in-store benefits of its
Reinvention strategy. Starbucks further announced the
implementation of 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 progressive
margin expansion and earnings growth.
“We are very confident in our ability to create a more
resilient, durable business for the long-term,” said Rachel
Ruggeri, executive vice president and chief financial officer.
“While our opportunity is clear, we know that our success,
everything we do, is dependent on the differentiated experience our
partners create for our customers. After all, our partners are our
superpower.”
Reinvigorate Partner Culture
Paramount to Starbucks partner promise of bridging to a better
future, is creating opportunities for partners to grow. The company
is committed to furthering its mission, promises and values while
investing in the partner experience around the world.
“To remain the retail industry employer of choice, we must
continue to create a uniquely Starbucks experience that uplifts,
inspires, and engages our partners,” said Sara Kelly, executive
vice president and chief partner officer. “We will also continue to
listen to their evolving needs and best support them in their job,
on their team and in their life.”
The company continues to invest in all aspects of the partner
experience, while benefitting from lower attrition and higher
tenure in US stores. By the end of FY25, the company in the US
expects to double hourly income versus FY20, through more
hours and higher wages. Next week, the company will share details
on a new bundle of partner experience enhancements in the US,
solidifying its status in providing the best portfolio of benefits
across the industry for hourly retail work.
Starbucks Arts Prize
Starbucks also announced it will soon unveil a new Starbucks
Art Prize – which aims to celebrate art as a catalyst of human
connection – focusing on an inspiring artist who represents joy,
courage, craft, and belonging. Each year, Starbucks will select one
visual artist with a new voice to sponsor with $1 million and
display their art in our stores around the world. Additionally,
Starbucks will pick five emerging architects to design five stores
each year across the network.
“Our cafes often represent the beauty of the local communities
we serve,” said Narasimhan. “Whether I’m walking down one of the
halls of our Support Center or visiting a store, it’s very clear to
me that art, music, architecture and culture serve as inspiration
for Starbucks to dream bigger. The walls inside our 38,000 stores
and the walls outside our 38,000 stores are essentially galleries -
featuring art in service of human connection.” Starbucks will
announce the approach to the selection at the company’s Annual
Meeting of Shareholders.
Earlier today, the company set guidance for FY24. Global comps
between 5-7 percent, with revenue growth at the low end of the
10-12 percent range and earnings growth of 15-20 percent,
reflecting the multiple paths to deliver double digit revenue and
earnings growth. The Starbucks business has great momentum, with
significant headroom and strength in the brand, confidence in its
ability to further grow and invest in our partners and the business
while delivering consistency in shareholder returns. The company
sees multiple paths to the shape of the long-term algorithm of comp
growth of 5 percent or greater, revenue growth of 10 percent or
greater, and EPS growth of 15 percent or greater.
Webcast
A replay of the webcast and slides shown during the event’s
presentations will be available on the Events & Presentations
section of the company’s website until end of day, Friday, April
26, 2024. The event will be webcast and can be accessed on the
company’s website at:
https://investor.starbucks.com/ir-home/default.aspx.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to
ethically sourcing and roasting high-quality arabica coffee. Today,
with more than 38,000 stores worldwide, the company is the premier
roaster and retailer of specialty coffee in the world. Through our
unwavering commitment to excellence and our guiding principles, we
bring the unique Starbucks Experience to life for every customer
through every cup. To share in the experience, please visit us in
our stores or online at https://stories.starbucks.com or
www.starbucks.com.
Forward-Looking
Statements
Certain statements contained herein are “forward-looking”
statements within the meaning of applicable securities laws and
regulations. Generally, these statements can be identified by the
use of words such as “aim,” “anticipate,” “believe,” “continue,”
“could,” “estimate,” “expect,” “feel,” “forecast,” “intend,” “may,”
“outlook,” “plan,” “potential,” “predict,” “project,” “seek,”
“should,” “will,” “would,” and similar expressions intended to
identify forward-looking statements, although not all
forward-looking statements contain these identifying words. By
their nature, forward-looking statements involve risks,
uncertainties, and other factors (many beyond our control) that
could cause our actual results to differ materially from our
historical experience or from our current expectations or
projections. Our forward-looking statements, and the risks and
uncertainties related thereto, include, but are not limited to,
those described under the “Risk Factors” and “Management's
Discussion and Analysis of Financial Condition and Results of
Operations” sections of the company’s most recently filed periodic
reports on Form 10-K and Form 10-Q and subsequent filings with the
SEC, as well as:
- our ability to preserve, grow and leverage our brands;
- the acceptance of the company’s products and changes in
consumer preferences, consumption, or spending behavior and our
ability to anticipate or react to them; shifts in demographic or
health and wellness trends; or unfavorable consumer reaction to new
products, platforms, reformulations, or other innovations;
- the costs associated with, and the successful execution and
effects of, our existing and any future business opportunities,
expansions, initiatives, strategies, investments and plans,
including our Reinvention Plan;
- the impacts of partner investments and changes in the
availability and cost of labor including any union organizing
efforts and our responses to such efforts;
- the ability of our business partners, suppliers and third-party
providers to fulfill their responsibilities and commitments;
- higher costs, lower quality, or unavailability of coffee,
dairy, energy, water, raw materials, or product ingredients;
- the impact of significant increases in logistics costs;
- unfavorable global or regional economic conditions and related
economic slowdowns or recessions, low consumer confidence, high
unemployment, weak credit or capital markets, budget deficits,
burdensome government debt, austerity measures, higher interest
rates, higher taxes, political instability, higher inflation, or
deflation;
- inherent risks of operating a global business including
geopolitical instability;
- failure to attract or retain key executive or partner talent or
successfully transition executives;
- the potential negative effects of incidents involving food or
beverage-borne illnesses, tampering, adulteration, contamination or
mislabeling;
- negative publicity related to our company, products, brands,
marketing, executive leadership, partners, board of directors,
founder, operations, business performance, or prospects;
- potential negative effects of a material breach, failure, or
corruption of our information technology systems or those of our
direct and indirect business partners, suppliers or third-party
providers, or failure to comply with personal data protection
laws;
- our environmental, social and governance (“ESG”) efforts and
any reaction related thereto such as the rise in opposition to ESG
and inclusion and diversity efforts;
- risks associated with acquisitions, dispositions, business
partnerships, or investments – such as acquisition integration,
termination difficulties or costs or impairment in recorded
value;
- the impact of foreign currency translation, particularly a
stronger U.S. dollar;
- the impact of substantial competition from new entrants,
consolidations by competitors, and other competitive activities,
such as pricing actions (including price reductions, promotions,
discounting, couponing, or free goods), marketing, category
expansion, product introductions, or entry or expansion in our
geographic markets;
- the impact of changes in U.S. tax law and related guidance and
regulations that may be implemented, including on tax rates and the
Inflation Reduction Act of 2022;
- the impact of health epidemics, pandemics or other public
health events on our business and financial results, and the risk
of negative economic impacts and related regulatory measures or
voluntary actions that may be put in place, including restrictions
on business operations or social distancing requirements, and the
duration and efficacy of such restrictions;
- failure to comply with anti-corruption laws, trade sanctions
and restrictions or similar laws or regulations; and
- the impact of significant legal disputes and proceedings, or
government investigations.
A forward-looking statement is neither a prediction nor a
guarantee of future events or circumstances, and those future
events or circumstances may not occur. You should not place undue
reliance on the forward-looking statements, which speak only as of
the date of this report. We are under no obligation to update or
alter any forward-looking statements, whether as a result of new
information, future events or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20231102263905/en/
Starbucks Contact, Investor Relations: Tiffany Willis
investorrelations@starbucks.com
Starbucks Contact, Media: Reggie Borges
press@starbucks.com
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