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Starbucks (SBUX, $87.84) unveiled a new strategy today to reinvent itself inside and out, and to expand around the world. Starbucks plans to spend roughly $450 million to put new equipment in its North America locations to speed up service, cutting down on labor-intensive processes for making drinks and food. It also announced improvements to working conditions and pay for Baristas amidst rising unionisation across Starbucks stores.
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The event, led by interim CEO Howard Schultz, presented actions and target investments in the company’s partners, customers, and stores which it expects to accelerate its long-term growth. Schultz introduced incoming CEO Laxman Narasimhan, who will officially join on October 1, 2022.
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The Seattle-based company is projecting earnings per share growth of 15% to 20% annually over the next three years, up from its prior long-term outlook given in late 2020. Global and US same-store sales are expected to rise 7% to 9% annually.
Why it matters
Over the last year, Starbucks baristas have been unionizing and expressing dissatisfaction over pay for tenured employees, understaffed stores and other working conditions. Surging demand for cold beverages, customized drinks and mobile orders have also caused in-store operations to slow down over the years hence the need for newer products for drink prep. No wonder the coffee giant needed a bold overhaul to resolve growing tensions and rethink its current game plan.
