Starbucks plans to take advantage of growing tech, stores and worker spending

SEATTLE, Sept 13 (Reuters) – Starbucks Corp (SBUX.O) expects earnings to grow 15-20% per share over the next three years, a significant increase from previous forecasts based on spending plans of 2 .5 to 3 billion over the next three years. same period on technology, new stores and renovations, the coffee chain announced on Tuesday.

The company is introducing technology to speed up production of its increasingly popular cold drinks and send digital orders away from crowded places as it seeks to prevent American cafes from being overwhelmed with orders and improve conditions of employees, she announced at her Investor Day event.

The Seattle-based company plans to return $20 billion to investors via stock buybacks and dividends from fiscal year 2023 to 2025. Wall Street analysts had largely expected updates to earnings are in line with previous forecasts of 10-12% growth.

A rise in digital orders, which now account for almost a quarter of all orders, helped the coffee chain gain market share during the COVID-19 pandemic, but also caused barista burnout and put strained the physical capacity of older stores.

The company is exploring “load-balancing” technology that can send orders to stores that have the capacity to fulfill them – instead of stores already criticized by drive-thru customers, for example, the manager said. technology Deb Hall Lefevre in an interview with Reuters.

“REINVENTION” OF STARBUCKS SINCE THE PANDEMIC

The pandemic has changed customer behavior, leading to a deluge of mobile orders, delivery and drive-thru, as well as an increase in cold beverages and personalized coffee drinks.

Calling it a “reinvention,” the company outlined a sweeping plan led by interim chief executive Howard Schultz, who will be replaced by Laxman Narasimhan in April.

The plan includes new equipment to heat food faster with less plastic waste, new store designs with larger shelves for orders, and additional employee perks.

A new system for iced coffee drinks cuts the time it takes to make a Mocha Frappuccino by almost a minute, down to 35 seconds. Baristas would no longer need to carry a bucket of ice to the station every hour as the ice will automatically feed into the new equipment.

Another machine, which brews hot coffee one cup at a time rather than in bulk and eliminates paper filters, is being tested in Minneapolis and could be rolled out next year.

Starbucks is on track to reach 45,000 stores by the end of fiscal 2025 — that’s nearly eight new stores a day — he said. This includes 2,000 net new stores in the US and select delivery-only locations.

In China, it plans to nearly double the number of stores to 9,000 – that’s a new store almost every nine hours.

UNION CONTEXT

Employees at 236 stores voted to join a union in the past year, at nearly 9,000 Starbucks-owned U.S. locations. Conversely, 52 stores voted against unionization, according to data from the National Labor Relations Board.

Frank Britt, brought in by Schultz to lead the company’s transformation strategy, said workers know how to solve business problems because they are on the front line.

“A lot of the concerns of partners, whether union affiliated or not, are valid concerns. We agree, there is a trust deficit,” he said in an interview.

Union members staged protests this week to draw attention to their demands. Billie Adeosun, a Starbucks employee since 2015 who works at a unionized site in Olympia, said Monday that higher wages were a top priority.

The company raised pay to nearly $17 on average at non-union US sites. Starbucks says it is prohibited by law from offering increased benefits to unionized workers without negotiating on them. Read more

“We know these benefits or higher wages…wouldn’t even exist without the unions,” said Adeosun, who earns $15 an hour. “We were able to shine the spotlight on this company and show that it is not the liberal company that it claims to be.”

Reporting by Hilary Russ; Editing by Josie Kao

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