The Wall Street Journal reports that at an investor meeting yesterday, Starbucks interim CEO Howard Schultz said that the company "over the coming year plans to spend hundreds of millions of dollars to update its stores, aimed at improving customer service and reducing employee turnover. It expects to spend between $2.5 to $3 billion annually through its 2025 fiscal year to build new types of stores and deploy updated equipment across locations." He said that the company expects that the expenditures will result "in higher sales and profits" - between 10 and 12 percent per year from 2023 to 2025.
More from the Journal story:
"Schultz and other executives have been crafting what they call a reinvention plan for Starbucks, aimed at evolving the 35,000-location chain to better meet customers’ current tastes. Starbucks now sells the majority of its beverages with ice, versus hot cups of coffee. The chain’s baristas have said they struggle at times with increasingly complex drink orders and growing demand for food.
"Starbucks executives on Tuesday said the company would invest $450 million in its existing North American stores over the next fiscal year, including adding faster coffee brewers and food ovens. A patented machine Starbucks will use to make batches of cold brew coffee, for example, is expected to cut the time to seconds from 20 hours currently, Chief Operating Officer John Culver said.
"Starbucks said it would also add 2,000 stores in North America by 2025, including new locations designed to handle only pickup, delivery or drive-through orders. The new store designs and equipment aim to speed service and make work easier for baristas, the company said.
"It said it expects to have nearly 45,000 stores globally by 2025, and is on track to reach a previously set goal of 55,000 locations by 2030."
Schultz also used the moment to introduce Laxman Narasimhan, CEO of Lysol maker Reckitt Benckiser Group, who will succeed him as Starbucks’s next CEO "in April 2023, after a six-month period learning under the chain’s longtime leader."
- KC's View:
I've been picking on Schultz and Narasimhan lately, so I'm going to give them a break for a moment. (Though I'd refer you to a conversation about Starbucks in "Your Views," below.)
For the moment, I am just trying to wrap my head around the idea that they plan to add thousands of stores in the next few years, in addition to remodeling the ones they have.
I mean, it isn't like one wanders communities of any decent size and thinks, "What this place needs is another Starbucks." I don't ever think that, and I like Starbucks.