A reinvigorated Starbucks plans to turbocharge its global growth, opening 17,000 new stores by 2030, while also cutting $3 billion in costs.
The Seattle-based coffee chain unveiled its accelerated expansion plans after reporting its fiscal fourth-quarter earnings on Thursday. The company now has about 38,000 locations worldwide and said it intends to increase that number to 55,000 by the end of the decade, averaging eight new stores a day.
Starbucks said what it called its "Triple Shot Reinvention Strategy" entails elevating the brand through better-run stores; strengthening the company’s digital capabilities; and becoming truly global by adding to its brick-and-mortar fleet with more purpose-defined stores and accelerated renovations.
“We see an opportunity to better leverage our footprint to serve the evolving needs of our customers," Sara Trilling, executive vice president and president of Starbucks North America, said in a statement.
She added that "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. 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.”
Ongoing Reinvention
The company also said it was implementing a $3 billion "efficiency program," namely cost cuts — with $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."
The new initiative is a part of a reinvention effort that was introduced by founder Howard Schultz at the company’s Investor Day roughly a year ago, a plan that aims to "reset" the business by elevating the in-store experience for customers and employees. It appears to have reaped some good results.
For the fourth quarter, Starbucks reported global comparable store sales increased by 8%, driven by a 4% increase in average customer tickets and a 3% increase in comparable transactions. North America and U.S. comparable store sales rose 8%, from a 6% increase in average customer tickets and a 2% increase in comparable transactions.
Starbucks debuted 816 net new stores in the quarter, ending the period with 38,038 stores total, with 52% company-operated and 48% licensed.
"Turning to International, in the fourth quarter, we saw record store growth of nearly 600 stores across the segment, with international store count remaining higher than that of the U.S.," Starbucks CEO Laxman Narasimhan said on the earnings call. "Looking ahead, we remain fully optimistic about our headroom across the U.S. and internationally, and we see limitless possibilities across all areas of the business."
The company expects to have nearly 41,000 stores globally by the end of fiscal year 2024. The U.S. store count is slated to reach more than 16,300, with 4% net new store growth planned in fiscal 2024 and "an aspiration to reach 20,000 over the long term," Starbucks said.
“Over the past five years, we have opened 9,000 stores, 7,000 of which were outside of the U.S.,” Michael Conway, Starbucks group president of international and channel development, said in a statement.