12,000 more Starbucks to open by 2021
Move will increase number of stores to 37,000 worldwide
Even with Starbucks stores sometimes across the street from each other in major cities, the coffee chain’s leaders said Wednesday they will open roughly 12,000 new locations by 2021.
The move will increase its store count to 37,000 worldwide and is one prong of a sweeping five-year plan executives say will boost revenue by 10% annually.
Howard Schultz, speaking at his final investors conference as Starbucks’ CEO, touted the company’s new premium offerings, which the company expects to also help increase annual earnings by 15% to 20% per share.
Those more upscale shops include the unveiling of at least 1,000 Starbucks Reserve stores, featuring varied brewing methods and artisanal foods created by new Italian food partner Princi. The company will also seek to bolster revenue by opening stand-alone Princi food and baked-goods stores starting at the end of next year in New York, Chicago and Seattle.
The new premium strategy will be a priority for Schultz, who announced last week he will be replaced by Starbucks President Kevin Johnson as of April 3.
Schultz, who will become executive chairman, has noted he will also continue focusing on social impact projects — which he says will likely become all the more important during the course of the Donald Trump presidency.
“I think what that means for companies, no matter what industry you’re in, is that role and responsibility that we have as employers is going to be much greater,” Schultz said of the next four years. “I think we fully understand that we have an enormous responsibility to multiple constituencies as we go forward in this uncharted place called America right now.”
On the business side, the company detailed a five-year road map Johnson said “is the most aspirational plan in the history of Starbucks.”
Along with the new Reserve shops, the strategy includes four new roasteries and adding specialty Reserve bars in up to 20% of the company’s traditional storefront locations over the next five years.
While the core business is robust, with revenue increasing 27% to $20.9 billion this year as compared to 2014, Starbucks executives said innovative experiences are key to wooing consumers who are increasingly content to park themselves on their smartphones and skip the trip to the mall.
Investors apparently liked what they heard. Starbucks shares rose 2.3%, or $1.32, to close Wednesday at $58.76.
“There is a seismic change that we are experiencing as a bricksand-mortar retailer,” Schultz said, referring to the dramatic rise in e-commerce and mobile shopping. “We have to be creative, and we have identified a very, very significant opportunity in the reserve brand that ... will be a new source of revenue,” profits and growth.
The company is also putting a heavy emphasis on bolstering its digital experience. Johnson has a deep background in technology, having spent 16 years at Microsoft and then five years as CEO of Juniper Networks, a developer of networking products.
This year, the coffee company began tailoring offerings to customers through its app that are based on past purchases and preferences. Starting next year, some coffee drinkers will be able to speak their order into their smart phone app before picking it up at a local store. The company is also expanding its mobile payment options.
Since Schultz bought Starbucks in the late 1980s, turning a small coffee company into a corporate giant, his leadership style and values have been deeply enmeshed with the Starbucks brand. Wednesday, he reiterated his confidence in Johnson and the company’s leadership team.
But “I’m not leaving,” Schultz said. “Kevin is going to be the CEO on April 3, but I’m here to do everything I can to lend my help and support in the areas that I’m going to be focused on. ... I am deeply engaged in making sure the legacy of Starbucks continues at the level it has in the past.”