Can Starbucks hit 55K units by 2030?

Starbucks is throwing down the growth gauntlet, announcing it will spend the next three years raising comparable store sales growth and adding locations around the world. Sales in China, for example, are expected to nearly double over the next three years, while store count will increase 50%, reaching 9,000 stores. Globally, the chain expects to approach 45,000 stores by the end of 2025 and is on track to reach nearly 55,000 stores by 2030.

"As we execute on our reinvention plan, we are building on our 51-year history of market leading innovation to position our business and our brand for the next chapter of growth," said interim CEO Howard Schultz Tuesday during the chain's investor day. "Guided directly by our partners, we have already begun to take action on an inspired roadmap to build the future of Starbucks, all while staying true to our mission of uplifting communities through a shared love for coffee and further extending our coffee leadership and innovation.

"I am confident that our partners and world-class leadership team will capture the significant global growth opportunity ahead, unlocking value for all our stakeholders."

Schultz also introduced incoming CEO Laxman Narasimhan, who will take the lead next month.

"Starbucks is a growth company, and our accelerated expansion is a direct reflection of the expected returns from our reinvention plan," Ruggeri said in a company press release. "By making strategic and highly targeted investments to drive value for partners, Starbucks will also drive value for customers and shareholders, while managing costs, improving margins, and elevating the Starbucks Experience for all stakeholders."

The company's global store portfolio will grow by roughly 7% annually from 2023 to 2025, up from the previous estimate of approximately 6%. Starbucks also expects global revenue growth in the range of 10% to 12% annually from 2023 to 2025, driven by investments that elevate partner engagement and store efficiency, industry-leading digital programs, an engaged and growing Starbucks Rewards membership base, game-changing product innovation and a rapidly expanding global footprint, said Howard.

Investor relations

The company said investors would see solid margin expansion in fiscal 2023 with more expansion in fiscal 2024 and 2025. Non-GAAP EPS growth is expected to be in the range of 15 to 20% annually through 2025, representing an improvement from the previous range of 10 to 12%, according to the release.

Starbucks plans to resume its share buyback program re-instituting a healthy return of shareholder capital, yielding an annual EPS benefit of approximately 1%, net of incremental interest, beginning in fiscal year 2024. Between dividends and share buybacks, the company expects to return nearly $20 billion to its shareholders in the next three years.

Employee investments

Starbucks also plans to invest in employees via recruiting, training and onboarding, which will lead to better customer experiences, uplifting brand affinity and customer loyalty.

Employees will also see:

• Wage and recognition innovation, including helping give partners the hours they need, expanding digital tipping and incorporating other opportunities to increase overall pay.
• Well-being benefits, featuring enhanced sick pay, savings and student loan management benefits and additional mental health support.
• Personalized career mobility through a newly introduced partner app and the development of personalized career paths.
• Investments in store managers, including leadership training, reinvention of scheduling and decision tools and career journey mapping to improve store manager retention and empower them to focus on core functions of the job that increase satisfaction and overall performance of their store partners. Stores managed by partners with over three years of tenure have 13% greater weekly sales and higher customer satisfaction.

This work is beginning at over 9,000 U.S. company-operated stores, but the leadership team will implement the most effective practices in its other U.S. and global stores.

Unlocking experiential convenience for customers

To provide a better experience for customers, Starbucks is investing in purpose-built store concepts and is focused on delivering beverage innovation and expanding effortless digital convenience.

• Investing in purpose-built store concepts means that the chain is investing an incremental $450 million in the U.S. to expand pick-up, delivery-only and drive-thru-only locations. The diversified portfolio of stores and customer channels such as mobile order and pay will enable Starbucks to further meet its customers whenever and wherever they want.
• In an effort to offer more innovative beverages, the chain has developed the Siren System, which reduces the time and number of steps it takes for employees to make cold beverages, unlocking productivity gains and freeing up time for partners to connect with customers. In addition, the chain is developing a way of extracting cold coffee and espresso with the Cold Pressed Cold Brew system, which delivers cold-press coffee in a matter of seconds and in fewer than four steps, a step-change improvement when compared to today's cold brew which is steeped for 20 hours and takes more than 20 steps to make. The Cold Pressed Cold Brew will begin testing in stores in fiscal 2023. Starbucks is also elevating the quality and craft of hot brewed coffee with the launch of Clover Vertica, which serves a freshly ground, brewed cup of hot coffee in just 30 seconds.
• Expanding effortless digital convenience is more important than ever, and to make it easier for customers to get their orders when and where they want, Starbucks has partnered with DoorDash, which expands delivery to a national scale alongside UberEats. It's also evolving its Starbucks Rewards program with Starbucks Odyssey, a Web3-enabled experience that will bridge the physical and digital customer experience. Through Starbucks Odyssey, customers will unlock experiential benefits — both digitally and in-person — and become a part of a digital community built on human connection, according to the release.

The international scene

Starbucks International segment is also a hot growth area, as two-thirds of global retail growth over the next three years is expected to come from its international business. Underpinning the foundation is the:

• Licensing model, which represents over 50% of the chain's international portfolio and includes 17,000 licensed stores including 6,500 in the U.S.
• Acceleration of the digital Starbucks Experience thanks to Starbucks Digital Solutions, a platform created for international markets to deliver a more consistent digital experience.
• Growth in China: Through store expansion, growth in omnichannel, ongoing digitization efforts, increased customer and partner engagement and the extension of coffee craft and innovation leadership, China sales are expected to nearly double over the next three years, while store count is expected to grow by 50%, reaching 9,000 stores.

At-home and ready-to-drink

In at-home coffee, Starbucks is expanding its reach with products that highlight its strengths in locally relevant ways, such as the recent launch of Starbucks super-premium mini cups in China, and the upcoming launch of Starbucks Reserve on Nespresso Vertuo.

The company is also innovating and introducing flavors and formats in ready-to-drink, entering the energy category with the launch of Starbucks Baya Energy and bringing the Starbucks Pink Drink, inspired by a global customer favorite, to a convenient new ready-to-drink format.

Starbucks Coffee Company has nearly 35,000 stores worldwide.