Starbucks unveiled its “Triple Shot Reinvention” strategy, which will focus on three priorities: 1) elevating the Starbucks brand, 2) strengthening the company’s digital capabilities, and 3) becoming truly global.
The strategy will be customized with “two pumps” to unlock efficiency and reinvigorate partner culture. The company said the strategy includes:
- Elevating the brand through better run stores, growing the portfolio with more purpose-defined stores and accelerated renovations, and driving further product innovation.
- Strengthening and scaling digital by doubling its 75 million global Starbucks Rewards Members within five years, as well as expanding digital and technology collaborations to elevate the partner and customer experience.
- Becoming more global by accelerating store expansion to 55,000 globally by 2030.
- Unlocking efficiency to generate US$3 billion in savings over three years – with US$2B outside the store – to deliver returns to shareholders through margin expansion and earnings growth.
- Reinvigorating 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.
The long-term growth strategy is officially called “Triple Shot Reinvention with Two Pumps,” and the strategy builds on the significant business momentum the company said it experienced over the past year.
The new strategy lays out a roadmap for how the company will deliver long-term, sustainable growth and “outsized returns” to partners, customers and shareholders.
Laxman Narasimhan, CEO of Starbucks, said, as part of the company’s presentation to investors in New York City, “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. 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.”
According to a Starbucks announcement, plans for the “Reinvention” strategy 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 the company said it is already seeing strong early momentum on every key metric.
Elevating the Brand Through Better Run, Purpose-Defined Stores and Innovation
With the Starbucks U.S. store count slated to reach more than 16,300 – with a four percent net new store growth planned in FY24 and an aspiration to reach 20,000 over the long term – the company said it will leverage the vast channels available to meet the evolving needs of customers and further elevate the brand. Starbucks will also focus on running better stores through a stronger operating foundation.
“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, adding popular beverage innovations to the core line up. 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.
Strengthening and Scaling Digital Capabilities
Starbucks also unveiled a new phase in the acceleration of its digital flywheel. Strengthening its digital leadership with a strategy aimed at:
- Doubling 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 and extending 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 six 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.”
A Focus on Tech Collaborations
Starbucks also announced three new technology collaborations it intends to execute in order to enhance the customer and partner experience:
- The company’s 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 Starbucks’ 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 eight new stores a day, 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 company said. The business will continue driving comps in existing stores through global and locally relevant innovation across dayparts and across channels in beverages and food.
“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 one-third of the earnings growth potential of Starbucks over the long-term.”
Starbucks further announced the implementation of a US$3 billion efficiency program – US$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.”
Reinvigorating 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 said it continues to invest in all aspects of the partner experience, while benefiting from lower attrition and higher tenure in U.S. stores. By the end of FY25, the company in the U.S. expects to double hourly income versus FY20, through more hours and higher wages.
To learn more about Starbucks, visit Starbucks.com.
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