Starbucks has added new flavor to its long-term growth strategy in what it is calling the “Triple Shot Reinvention with Two Pumps.” The five-part strategy aims to continue the company’s current momentum and deliver continued growth by elevating the Starbucks brand, strengthening the company’s digital capabilities and becoming truly global, as well as working to unlock efficiency and reinvigorate partner culture (the last two items are the “pumps”).
The new “Triple Shot” plan builds on the original reinvention strategy introduced by former CEO Howard Schultz at the company’s Investor Day in September 2022. Schultz returned to lead the company he founded for a third time in March 2022 after the retirement of then-CEO Kevin Johnson, in an appointment that was always intended to be temporary. In April 2023, former PepsiCo and Reckitt executive Laxman Narasimhan formally took over the CEO position after working closing with Schultz for eight months.
Both of Schultz’s previous periods as CEO marked significant growth for the coffee retailer, and this third time around was no different. After he passed the reins in April the company continued to see strong momentum, with global comparable stores sales up 8% year-over-year in fiscal 2023, which ended Oct. 1, 2023. North America and U.S. comparable store sales were also up 9% year-over-year and international sales increased 5%. Overall, net revenues in fiscal 2023 were up 12% for the year, reaching a record $36 billion. The company expects to further grow global comps and revenue in fiscal 2024 to the tune of 10% to 12%, and 5% to 7%, respectively. The company ended the year with a record 38,038 stores worldwide.
“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,” said Narasimhan in a statement to investors. “I am excited about our multiple paths to revenue growth and earnings, which should give you confidence in our ability to meet our goals. 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.”
Here are some of the details on how Starbucks plans to continue this momentum in the coming years:
Shot #1: Elevating the Starbucks Brand…
…through 4% net-new store growth in the U.S. in fiscal 2024, with an ultimate long-term goal of 20,000 U.S. stores. The company also said it plans focus on “purpose-defined stores and accelerated renovations,” as well as “running better stores through a stronger operating foundation.”
“Innovation in our store formats [such as] purpose-defined stores like pickup/drive-thru only, double-sided drive-thru and delivery-only allows us to better meet our customers where they are through differentiated experiences,” said Sara Trilling, EVP and President of Starbucks North America in a statement, adding: “To be clear, Starbucks has not saturated the U.S. market.”
Starbucks also plans to continue to drive visitor interest through ongoing product innovation, growing its coffee and core menu through “customization and personalized marketing.” In fact, beverage innovations now account for 85% of beverage sales, the company shared.
Shot #2: Strengthening Starbucks’ Digital Capabilities…
…by doubling global Starbucks Rewards members, currently numbering 32.6 million in the U.S., to 75 million members within in the next five years. Starbucks also wants to build on its successful rewards partnership with Delta Airlines and add additional “Rewards Together” partnerships with a financial institution and a hospitality partner within the next six months.
The company also will reset its tech architecture through three new technology collaborations designed to enhance the customer and partner experience, including:
- A partnership with Microsoft to collaborate with its innovation lab and leverage generative AIto “take product development and personalization to the next level”;
- Collaborating with Apple products in the first “Green Apron Innovation” store to experiment with and refine technology for store associates; and
- Reimagining the customer in-store experience with Amazon One and Just Walk Out technology, something the company is already trialing in several locations.
Shot #3: Becoming ‘Truly Global’…
… by expanding its global store footprint to 55,000 by 2030, an average of eight new stores a day, as well as the expansion of its digital platforms across all licensed partners globally. Belinda Wong, Chairwoman and Co-CEO of Starbucks China, said she has “great confidence and high ambition for our international business to fuel nearly one-third of the earnings growth potential of Starbucks over the long term.”
“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 of International and Channel Development at Starbucks in a statement. “We will become truly global as we create the surround-sound of omnichannel strategies in the 86 markets where we sell Starbucks coffee.”
and (Pump #1) Unlocking Efficiency
Starbucks announced the implementation of a $3 billion efficiency program — $2 billion of which will come from outside stores in the form of cost of goods sold — to both “reinvest in the business and deliver returns to shareholders through progressive margin expansion and earnings growth.”
(Pump #2) Reinvigorating Partner Culture
By the end of fiscal 2025, Starbucks expects to double hourly income compared to fiscal 2020 in the U.S. through more hours and higher wages. Next week, the company said it will also share details on a new bundle of partner experience enhancements in the U.S.
“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, EVP and Chief Partner Officer at Starbucks in a statement. “We will also continue to listen to their evolving needs and best support them in their job, on their team and in their life.”