Starbucks interim CEO Howard Schultz said during its Investor Day Tuesday that the largest U.S. coffee chain will see double-digit revenue growth as it continues to "reinvent" the store, customer and partner experience.
Schultz, who will be replaced in April 2023 by incoming CEO Laxman Narasimhan, touted the company's success despite current economic challenges and sweeping unionization efforts as it works on its next phase of growth.
Schultz, who temporarily took over in April, even noted that inflation has not impeded on customer demand.
"So far we have been immune … from any recognition whatsoever that there is a downturn in customer traffic, a downturn in terms of average ticket," Schultz said.
Schultz said that there has been a dramatic shift in it business with drive-thru now accounting for 50% of U.S. sales and mobile order accounting for 25%. There has also been a surge in demand for cold beverages. Still, Starbucks has successfully adapted to these changes, he said.
Exterior of a Starbucks location. (iStock / iStock)
Part of its Reinvention plan includes investing $450 million over the next few years to modernize its stores as well as invest in new equipment to cut down the time it takes to deliver coffee, according to Starbucks Chief Operating Officer John Culver, who plans to step down next month.
The investment is designed to help the company "unlock capacity and increase throughput" in stores, Culver said. This will not only enable greater efficiency but help the "drive accelerated revenue growth in a meaningful way" and "drive increase margins," Culver added.
However, it will also make the work easier for employees, many of whom have sought to unionize in recent months across the nation.
Starbucks touted its new Clover Vertica brewer, for instance, will be able to brew a cup of coffee on demand in under 30 seconds. The machine can also produce cold brew on demand in just a few seconds, according to Starbucks.
Its new proprietary Siren System has a custom ice dispenser, milk-dispensing system and faster blenders all within reach of baristas, which will supposedly cut the time it takes to make a Frappuccino from 87 to 36 seconds.
Drive-thru windows already equipped with new equipment has already led to increased revenue and helped to support the growing demand for cold beverages, Culver added.
The company plans to roll out new equipment across its entire U.S. portfolio during early fiscal year 2023.
Over the next three years, Culver projected the company will see 40% revenue growth.
Coffee chain sales nearing prepandemic levels
Espresso machine making fresh cup of coffee (iStock)
Sales by branded coffee shops in the United States increased 10% in the 12 months to June 2022 to reach $45.8 billion, a value that is 96% of its pre-pandemic sales, while the number of stores surpassed those seen before 2020, a report said on Tuesday.
According to Project Café 2023, a publication by World Coffee Portal, there are now 38,411 branded coffee shops in the United States, the world's largest consumer of the beverage, or 2.8% more than before the coronavirus pandemic.
The country's largest coffee operators — Starbucks Corp, Dunkin' and Panera Bread — all increased their presence in the U.S. market to reach 15,650, 9,262 and 2,173 stores respectively, the report said.
Reuters contributed to this report.