Starbucks to Modernize, Focus on Key Attributes of Convenience, Comfort & Connection

SEATTLE — Starbucks Corp. announced a range of new initiatives and goals for the future as President and CEO Kevin Johnson presented plans for building an enduring company during the company's 27th annual meeting of shareholders.

During the meeting, Johnson and Starbucks' leadership team discussed methods of reimagining and reinventing the core areas of the Starbucks experience.

"Starbucks is a different kind of company — and we have been since our founding," Johnson said. "Our long-term plan for growth with focus and discipline is built on the acknowledgement that the pursuit of profit is not in conflict with the pursuit of doing good. We are a part of millions of people's everyday lives around the world, and I believe we are uniquely positioned to be one of the most enduring brands of all time."

The company plans to reimagine Starbucks as the third place, focusing on the attributes of convenience, comfort and connection. The retailer plans to take a phased approach to modernizing the customer experience across all key touchpoints for customers, starting in New York this summer. Through this approach, Starbucks seeks to learn directly from customers and adapt changes to new and better experiences through technology and product innovation, as well as new and reimagined store formats, according to the leadership team.

Starbucks' investment in the future includes a $100-million cornerstone commitment to the new Valor Siren Ventures I LP, which is managed by Valor Equity Partners, and will serve as a growth driver for the next generation of food and retail start-up technology companies.

The investment is the first of its kind for the company. The new fund will seek to raise an additional $300 million in the coming months from other strategic partners and key institutional investors. Separately, Starbucks plans to explore direct commercial arrangements with these start-ups.

"We believe that innovative ideas are fuel for the future, and we continue to build on this heritage inside our company across beverage, experiential retail, and our digital flywheel," said Johnson. "At the same time, and with an eye toward accelerating our innovation agenda, we are inspired by, and want to support the creative, entrepreneurial businesses of tomorrow with whom we may explore commercial relationships down the road. This new partnership with Valor presents exciting opportunities, not only for these startups, but also for Starbucks, as we build an enduring company for decades to come."

Starbucks also plans to continue expanding and evolving programs like Starbucks Delivers and Starbucks Rewards.

"Our relationship with our customers starts the moment they think of Starbucks. They connect with us through their barista and the quality of what's in the cup they take with them," said Roz Brewer, Americas group president and chief operating officer. "Their third place is everywhere they're holding our cup. No matter their journey, after leaving our stores, that feeling of comfort stays with them. And in an increasingly busy and on-demand world, it's that feeling that keeps the third place growing."

Upcoming enhancements to Starbucks Rewards include the ability for all members to earn and redeem Stars for Rewards immediately after joining the program as of April 16. They will continue to earn two Stars for every $1 spent when using a registered Starbucks card for eligible purchases.

Additionally, a tiered Rewards structure will replace the existing system, offering more ways to put Stars toward free items:

• 25 Stars: Extra espresso shot, dairy substitute or additional flavor
• 50 Stars: Brewed hot coffee, hot tea or select bakery items
• 150 Stars: Handcrafted drink, hot breakfast or yogurt parfaits
• 200 Stars: Lunch sandwich, protein box or salad
• 400 Stars: Select merchandise or packaged coffee

Stars earned by Starbucks Rewards Visa credit and prepaid members will no longer expire.

"Since introducing Starbucks Rewards 10 years ago, we've experienced tremendous growth and continued to evolve the program to meet the changing needs and purchase patterns of our customers," said Chief Marketing Officer Matthew Ryan. "These new updates put choice in the hands of our customers and a personal touch they can only get from Starbucks."

The shareholders meeting included a look at Starbucks' new, greener cups, which it will trial in several markets worldwide over the next year. Customers in New York, San Francisco, Seattle, Vancouver and London will help test different cups that are both recyclable and compostable. Starbucks plans to choose the cup technologies from NextGen Cup Challenge winners and work with expertise and support from the NextGen Consortium, which supports Starbucks' efforts to minimize its environmental footprint.

"It was at our shareholders meeting one year ago that we launched multi-year initiatives around greener cups and digitally traceable coffee," Johnson said. "Today thanks to many valuable collaborations, we're seeing significant, tangible progress toward a greener future."

A key milestone is the use of lightweight, recyclable straw-less lids to all stores in the United States and Canada. Starbucks will roll out the lids in the next year, starting this summer in Los Angeles, San Francisco, Seattle, Washington, D.C., Indianapolis and Toronto.

Starbucks also previewed a feature on its mobile app that shows coffee beans' journey from bean to cup as part of a two-year project to explore the benefits of digital traceability.

Officials also discussed social initiatives, such as creating pathways for people who face barriers to opportunity, increased commitment to ending hunger and expansion of efforts to support unsheltered families in the Seattle area.