Starbucks will grow its store footprint, overhaul operations to better meet consumer demand

The news: Starbucks will lean on aggressive China expansion and automation as part of its reinvention plan to drive sales growth, the company announced at its Investor Day on Tuesday.

The goals: The coffee company expects its transformation plan will grow comparable store sales globally and in the US to 7% to 9% annually, an improvement from the company’s previous range of 4% to 5%.

• Starbucks is also targeting annual global revenue growth in the range of 10% to 12% from fiscal 2023 to 2025—two to four percentage points higher than its current range.
• The company plans to expand its store portfolio by 7% annually between fiscal 2023 and fiscal 2025.

The plan: The three major components of Starbucks’ reinvention plan are store expansion, maximizing store and employee efficiency, and improving the customer experience.

• While the US is by no means peripheral to Starbucks’ plans—the company plans to add 2,000 new stores in the US between fiscal 2023 and 2025—it’s China where it sees the biggest opportunity.
• Starbucks plans to grow its China store count by 50% to 9,000 stores over the next three years and expects sales to almost double in the same period.
• The company is also updating its loyalty program and investing in technology to accommodate consumers’ increased preference for cold beverages, as well as improve the digital ordering process.

Looking ahead: Starbucks’ China expansion is a huge bet that lockdowns—which have caused many businesses to shift away from the country—will eventually become a thing of the past.

While the company’s US strategy is less risky, its aggressive union-busting tactics could make recruitment for new stores difficult, and slow the rollout of its reinvention plan.