Sep 13, 2022 - Economy

Starbucks embarks on global reinvention and expansion

Starbucks logo outside a pickup store sign

Photo: David Paul Morris/Bloomberg via Getty Images

Starbucks unveiled a new strategy today to reinvent itself inside and out, and to expand around the world.

Why it matters: The coffee giant needs a bold overhaul to resolve growing tensions with some of its U.S. workers, adjust to new consumer preferences and behaviors, and rethink how it approaches its global markets.

Details: Starbucks plans to spend roughly $450 million to put new equipment in its North America locations to speed up service, cutting down on labor-intensive processes for making drinks and food.

  • These new systems can cut the time it takes to make a Frappuccino by almost a third, and reduce time to cook food.
  • New Clover Vertica machines can serve a freshly ground and brewed cup of coffee on demand in under 30 seconds.

The big picture: Surging demand for cold beverages, customized drinks and mobile orders have caused in-store operations to slow down over the years.

  • "Our physical stores were built for a different era and we have to modernize to meet this moment,” outgoing Chief Operating Officer John Culver said during the company's investor day.

What they didn't talk about: Much about recent unionization efforts.

  • “Let me be clear that we’re committed to respecting the NRLB process. We are now and will continue to bargain in good faith with the stores who have chosen to have a third party,” Culver said.

Be smart: Starbucks founder and interim CEO Howard Schultz stepped back in as CEO this year to try to right the ship.

  • Narasimhan in October will become "incoming CEO" to learn alongside Schultz.

What we're watching: Opening new stores is also a part of the plan with 3%-4% growth planned for the U.S. in the next three years (adding some delivery-only locations) and an outstanding 30% growth internationally.

  • The growth would bring the company to more than 25,000 international stores — including 9,000 in China alone — and 18,000 in the U.S. by 2025.

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