Digital, Unit Growth Key in Starbucks' Five-Year Plan
NEW YORK — Starbucks presented a five-year strategic plan to grow revenue by 10 percent and earnings per share by 15-20 percent at its biennial investor conference on Dec. 7.
The coffee chain also plans to drive growth by opening approximately 12,000 new stores globally by 2021 while continuing to elevate the Starbucks experience around the world.
"Industry-leading innovation is driving our core business and creating further separation from competitors all around the world," said Howard Schultz, chairman and CEO, who will step down from his position and be succeeded by president and chief operating officer Kevin Johnson on April 3, 2017. "Our Roasteries and Starbucks Reserve stores will further transform — and elevate — the Starbucks experience we deliver to our customers, and are laying the foundation for our next wave of profitable, global growth. I have never been more energized or optimistic about the opportunities ahead as Kevin transitions to the CEO role and leads the most talented and experienced leadership team in Starbucks history."
Two years after the first Starbucks Reserve Roastery opened in Seattle, the company announced plans to accelerate the presentation of the Roastery experience around the world. It will open the next Roastery in Shanghai in 2017, followed by Tokyo and New York City in 2018. A fifth location in Europe will be announced early next year.
Each Roastery will serve as the foundation for Starbucks Reserve stores, a format that integrates aspects of the Roastery with the culinary experience of Starbucks' new Italian food partner, Princi. The first Starbucks Reserve stores will open in Seattle and Chicago in the second half of fiscal 2017, and the company has plans to open 1,000 or more globally over time. The company also plans to open standalone Princi stores in Seattle, New York and Chicago in late 2017 and early 2018.
Starbucks also plans to extend elements of the high-end Roastery experience to its core Starbucks stores, adding Starbucks Reserve experience bars in up to 20 percent of its total portfolio, including new and renovated locations, by 2021.
Reserve Roasteries will serve as an innovation pipeline that will elevate the brand and contribute a "halo" to the entire Starbucks experience, the company stated. This includes new product breakthroughs such as its first limited-time beverage offering, the Smoked BUtterscotch Latte, and its Nitro Cold Brew. In core stores, beverages such as Flat White, Cold Brew, Latte Macchiato and Iced Coconut Milk Mocha Macchiato also support Starbucks' premiumization strategy. Starting in January, the company will introduce the Cascara Latte, another Roastery offering, nationwide.
Its food menu will see innovation and expansion through new products, including Sous Vide Egg Bites in January 2016; the spring launch of a Certified Gluten-Free Breakfast Sandwich; the expansion of the Bistro Box platform; and a regional rollout of organic soups.
On the digital front, Starbucks is unveiling a conversational ordering system, My Starbucks Barista, powered by artificial intelligence for the Starbucks mobile app. Using the app, customers will be able to place their orders via voice command or messaging interface. This is designed to offer further speed and convenience, enhance customer loyalty and engagement and further extend the accessibility of the app.
My Starbucks Barista will roll out first on iOS devices in limited beta in early 2017 and become available to more iOS and Android users in subsequent releases.
Starbucks also stated that while it is still early in the evolution of its one-to-one personalization, hyper-personalized e-mail reward offerings ave more than doubled customer response rates over previous segmented email campaigns, translating into increased customer engagement and accelerated spend. By early 2017, the company expects to complete the rollout of suggested selling and recommendations for paired or added items during mobile order and pay checkout.
"Starbucks continues to deliver record financial performance. The customer experience created in our stores by partners who proudly wear the green apron is what makes Starbucks a destination for 80 to 90 million customers a week," said Kevin Johnson, president and chief operating officer.
He added: "We are today executing against an ambitious, carefully-curated, multi-year strategy to further elevate the entire Starbucks brand and customer experience around the world, and further extending Starbucks leadership around all things coffee, retail and mobile. The power of our brand, the strength and momentum in our business, and the world-class management talent we have assembled give me great confidence in our ability to capture the enormous global growth opportunities ahead."