Starbucks sees even more stores in its future
Starbucks plans to open a whopping 22,000 locations to bring its massive store count to 55,000 by 2030.
At its bi-annual Investor Day, Rosalind Brewer, COO and group president-Americas, projected Starbucks’ U.S. base would expand by “nearly 800 gross stores each year.” She told investors, “Though we are growing off a large base, there is ample room to expand in regions where the Starbucks brand is less penetrated with particular focus on high-volume, high-margin suburban drive-thrus.”
Starbucks plans to accelerate its new format expansion, like pickup and curbside, projecting that it will expand drive-thru to nearly 45 percent of its U.S. portfolio by 2023, up almost 10 percent from fiscal 2020. Pre-COVID, roughly 80 percent of sales were to-go.
Starbucks opened its first Pickup location just over a year ago and will likewise speed up the expansion of the smaller format. People who work and live in cities as well as those working from home are found to be seeking branches closer to their home. Ms. Brewer said, “As we introduce more efficient formats, we’re reducing the long lines that can sometimes occur in metro locations, unlocking more sales. And since these are smaller stores, without seating areas, this enhances our fixed cost profile, which further contributes to improved margin.”
Same-store sales globally were down 9 percent in the fiscal fourth quarter ended September 27. Drastically fewer customers were picking up their coffee on the way to the office or working from coffee shops, although sales at suburban locations and drive-thru restaurants grew, according to CNN Business.
At Investor Day, Kevin Johnson, CEO, said Starbucks will benefit from an acceleration in changes in consumer behavior due to the pandemic, including the increasing appeal for more “convenient on-demand experiences with curated options” and consistent experiences, as well greater attention placed on sustainability and values.
He also noted that former U.S. Surgeon General, Vivek Murthy, recently described the pandemic as creating a “social recession,” supporting Starbucks’ prediction that community connection experiences will be sought out as the vaccine is distributed. Mr. Johnson said, “I believe Starbucks will be a top destination to facilitate social healing through human connection.”
- Starbucks Outlines Vision for the Future and Reaffirms Strategy for Continued Growth at Scale, Updates Ongoing Growth Model Signaling Company is Stronger and More Resilient Than Ever – Starbucks
- Starbucks Investor Day Transcript – Starbucks
- Starbucks Reports Q4 Fiscal 2020 Results – Starbucks
- Starbucks plans to open about 22,000 stores in the next ten years – CNN
- Does a co-working concept make sense for Starbucks’ business? – RetailWire
- Starbucks developing new store dedicated to pickup and delivery orders – RetailWire
DISCUSSION QUESTIONS: Will its newer formats and features (pickup, curbside, drive-thru, etc.) amplify expansion opportunities for Starbucks in the years ahead? Do you see post-pandemic changes in behavior as more of a benefit than a drawback for Starbucks?