Starbucks brews up big expansion plan
NEW YORK: Starbucks Corp, looking to the future as its longtime chief executive officer moves to other projects, plans to open 12,000 new locations within five years to boost its number of coffee shops worldwide by almost 50%.
The world’s largest coffee chain is also adding more food to its menu next year, including organic soups, gluten-free breakfast sandwiches and a wheat-free cooked egg product.
The chain also unveiled a new feature within its mobile app that uses voice command or messaging to place orders. The feature will be tested first on Apple Inc’s iOS operating system in early 2017
It also plans to open an outlet of its high-end coffee chain, Reserve Roastery and Tasting Room, in Europe, bringing the number to five globally.
Details of that l aunch would be announced early next year, it said.
Starbucks also said it would accelerate the opening of Reserve coffee “bars” selling premium coffee within Starbucks cafes to 7,400 stores by 2021.
The company had set a target of opening these bars in up to 1,000 cafes by the end of 2017.
Starbucks outlined its five-year growth plans to investors on Wednesday, about a week after it announced that Howard Schultz, who has built Starbucks into a global brand with 25,000 locations since first joining the company more than 30 years ago, would step down as CEO in April.
Starbucks has been facing increasing competition from Dunkin’ Donuts and McDonald’s as those companies add more specialty coffee drinks to their menus.
About 5,000 of the 12,000 stores Starbucks plans to open by 2021 will be in China.
The company said again that it expected China to eventually overtake the United States as its largest market, but didn’t say when it expects that to happen. Today there are about 2,500 stores in China and more than 13,000 in the US.
Starbucks also wants to get more customers to buy lunch at its shops by offering organic soups and adding more sandwiches and wraps. Iced beverages, such as cold brew coffee and iced lattes, are expected to become more popular in the next five years and account for about half of beverage sales.
An app update next year will use artificial intelligence technology to let customers order by voice and have the app respond immediately with a message. In China, the company said it would team up with popular messaging app WeChat to let users buy digital Starbucks gift cards for their friends.
Investors also got to hear from chief operating officer Kevin Johnson, who will replace Schultz as CEO in April.
Schultz, who will become executive chairman, stressed again on Wednesday that he wasn’t leaving the company and would oversee the growth of its high-end Starbucks Reserve Roasteries stores. But he made clear that Johnson will ultimately be in charge.
“He’s got the last word,’’ Schultz said. Since returning as CEO in 2008, Schultz oversaw the expansion of the chain’s food and beverage offerings and the growth of its popular loyalty programme and mobile app.
Starbucks has credited the rewards programme and app for helping consistently increase sales in the US, although growth has slowed more recently and traffic slipped in the latest quarter.
Schultz has said such technology adaptions will become increasingly critical for brick-and-mortar retail businesses to thrive as shopping habits change.
Johnson has a technology background, having spent years at companies such as Microsoft Corp and Juniper Networks.