On Thursday, Starbucks presented a plan to expand its footprint outside of the US as part of its quest for growth. It also laid out a plan to achieve cost savings of $3 billion in the next three years. According to the US news website, the company will add 35,000 locations by 2030 outside of North America.
As of October 1, 2023, Starbucks operates around 20,200 international cafes. The coffee giant plans to increase its total locations across the world to 55,000 by the year 2030. It is an increase of 44.73%. In a statement, the president (channel development and international development) of Starbucks, Michael Conway, said the company will add three stores out of every four locations outside of the USA.
Cost savings from the efficient operation of stores
Starbucks expects to improve cost savings by $1 billion by enhancing the efficiency of its stores. The balance savings of $2 billion will be achieved from the cost of goods sold. On Thursday, the coffee giant announced an initiative called ‘Triple Shot Reinvention Strategy’ to double its hourly income by the end of 2025 compared to FY 2020. The company expects to reach its ambitious goals by encouraging its workforce through increased wages for baristas and increased hours.
Workers at Starbucks join Workers United
According to the data gathered from the National Labor Board (NLRB), Starbucks announced several of its workers across 350 locations joined Workers United, a union of workers. However, the union and Starbucks have yet to reach an agreement on wages at these locations. Both the NLRB and the union said Starbucks is withholding the hike of its workers illegally at union stores and breaking the central labor law. Starbucks has denied the allegations voiced by the unions.
Announces Q4 results
Starbucks announced its Q4 results on Thursday and beat the estimates of Wall Street by reporting total revenues of $9.4 billion, a YoY increase of 11%. It posted impressive revenues and earnings in the quarter, recording a gain of 9.5% for its shares. The shares of Starbucks reversed the losses posted earlier this year. Its market cap was $115 billion at the close of Thursday.
In today’s BNN breaking news, the company posted revenues of $36 billion for the full year. It is a YoY increase of 12% for FY 2023. Comparable store sales worldwide clocked a YoY growth of 8% for FY 2023 and the quarter. It is in the background of transaction and ticket growth together.
Laxman Narasimhan, the CEO of Starbucks, said in a conference call that its reinvention plan launched in September 2022 is bearing fruit in terms of improving efficiency and sales. For instance, the chain has installed single-cup drip coffee brewers at over 600 locations. The new initiative expects to address issues plaguing baristas and Starbucks in the recent period.
The cold beverages from Starbucks have become more popular. It also pushes for premium add-ons like cold foam to improve its sales. The trend of customers also changed, and they started ordering drinks through a mobile app. It helps them get their drinks as soon as they reach the store. However, the baristas are struggling to offer quality customer service and serve quickly. The reinvention plan unveiled by Howard Schultz, the previous CEO of Starbucks, simplifies operations and improves the speed of the service compared to a year ago.