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09/14/2022

Starbucks to Make Massive New Store Push as Part of Reinvention Plan

Company plans to add 2,000 net new stores by 2025, among other growth initiatives.
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SEATTLE — Starbucks unveiled aggressive growth plans during its 2022 Investor Day event on Sept. 13.

The coffee giant plans to add 2,000 net new stores in the United States by 2025, diversifying its brick-and-mortar portfolio across cafes, pick-up stores, drive thru-only and delivery-only locations in an effort to meet customers whenever and wherever they want.

The company will also invest $450 million next year to modernize its existing North American stores with new equipment and technology that enable greater efficiency and reduced complexity for store employees, reported Chain Store Age, a sister publication of Convenience Store News.

"Our partners have come to expect more from us," said John Culver, outgoing group president, North America, and chief operating officer. "Our customers have come to expect more from us. And it is clear our physical stores must modernize to meet this moment."

The sweeping modernization effort is part of Starbucks' reinvention strategy, which comes at a time when Starbucks' business is evolving to include a greater emphasis on cold drinks, which account for approximately 60 percent of its year-round sales and 80 percent of its summer sales.

The company noted that requests for drink customization have risen dramatically in recent years, with two out of every three drinks now being customized with various add-ons, and many customers now order through the Starbucks app.

"When we think about our existing store portfolio and our investments, they must deliver in a few critical areas," Culver said. This includes "reducing the level of complexity and making work easier for our partners."

Updated equipment will include a dispenser system that reduces the time it takes employees to create Mocha Frappuccinos from 86 seconds to 35 seconds. Starbucks is also rolling out ways of brewing hot coffee and cold brewed coffee that are less labor intensive than current methods.

BOOSTED BENEFITS

The company also touched on the recent unionization drive by employees, who have grown more vocal about their dissatisfaction concern working conditions. Since last year, 236 Starbucks locations in the U.S. have voted to unionize.

"The reality is, we have a trust deficit with our partners," said Frank Britt, executive vice president and chief strategy officer. "The work we do in our stores today is too physically hard.

The day before the investor conference, Starbucks announced it is following up on its previous commitment of $1 billion to improve wages, training and stores with a set of offerings designed to support eligible employees in two areas of financial well-being: savings and student loan debt.

For fiscal 2023, Starbucks identified multiple near-term solutions that it will implement, including wage and recognition innovation, well-being benefits like enhanced sick pay, personalized career mobility and investments in store managers.

"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. "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 added.

Chain Store Age and Convenience Store News are properties of EnsembleIQ.