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Starbucks is brewing up an ambitious expansion plan that aims to open an average of eight new stores per day, a move intended to double its global footprint to 55,000 stores by 2030. The coffee giant recently announced its “Triple Shot Reinvention with Two Pumps” strategy, targeting significant growth and various enhancements.
Investor Delight and Positive Q4 Earnings
The announcement came on the back of strong Q4 2023 earnings, which exceeded market expectations, causing Starbucks shares to surge nearly 10% in after-hours trading. During the quarter, the company reported a remarkable 8% increase in same-store sales, translating into net sales of $9.37 billion, marking an 11.4% gain. Starbucks’ stock (ticker: SBUX) closed just above the $100 mark.
The Triple Shot Reinvention Plan
Starbucks’ comprehensive strategy includes five key elements:
Elevating the Brand: This involves improving and renovating stores to enhance the overall Starbucks experience.
Expanding Starbucks Reward Membership: The company aims to double its existing 75 million Starbucks Reward Membership base to 150 million by 2028.
Cost Savings: Starbucks plans to find $3 billion in savings by 2025, focusing on more efficient operations.
New Store Openings: The most ambitious aspect of the plan involves opening an average of eight new stores per day until 2030.
Doubling Down on China: Starbucks has set its sights on growing its global footprint to 55,000 stores by increasing its U.S. store count to 20,000 in the long term, with a substantial portion of the new stores being located in international markets.
Starbucks’s China Ambitions
Starbucks specifically highlighted China as a significant growth opportunity, noting that “Starbucks China is uniquely positioned to support the growth opportunities the market presents.” The company’s alignment with the Chinese Communist Party in recent years has further reinforced its high hopes for expansion in the Chinese market.
Worker-Friendly or More Work?
The final element of Starbucks’ Triple Shot plan focuses on workers. The company states that it “expects” to double hourly income for store employees by fiscal year 2025. While this may seem like a positive move, it comes with some important caveats.
The use of the word “expects” provides Starbucks with flexibility to delay pay raises beyond 2025 if it serves the company’s financial interests. Additionally, Starbucks plans to double hourly income compared to 2020 levels, but inflation since 2021 has increased the cost of living for workers, potentially reducing the impact of this commitment.
Moreover, Starbucks intends to achieve this income increase “through more hours and higher wages,” which could mean employees need to work longer hours to earn more, rather than receiving a true raise.
For investors, Starbucks’ ambitious plan may sound appealing, but for the average worker, the specifics of how these changes will benefit them remain unclear. Starbucks has announced it will provide further details on its income enhancement plan in the coming week.