Two-thirds of the planned savings will come from the cost of goods sold, with the remaining $1bn generated through an optimised store format portfolio
A Starbucks store in Temecula, California | Photo credit: Mahavir Shah
Starbucks has announced plans to generate $3bn in savings over the next three years and grow its US footprint with ‘purpose-defined’ stores.
As part of an updated long-term growth strategy, dubbed the ‘Triple Shot Reinvention’, Starbucks will implement a $3bn efficiency programme to reinvest in its business and deliver higher returns to shareholders.
Approximately $2bn of the planned savings will come from the cost of goods sold – usually defined as direct costs associated with producing goods or services, including materials and labour – with the remaining third coming from efficiencies generated through optimised store formats.
Starbucks currently operates more than 16,350 US stores and 38,000 globally. The Seattle-based coffee chain said convenience-focused store formats, including drive-thru only and delivery-only outlets, will lead planned 4% outlet growth in the US over the next 12 months. It has a longer-term goal of operating 20,000 US sites.
“We see an opportunity to better leverage our footprint to serve the evolving needs of our customers. Innovation in our store formats, to purpose defined stores like pick-up, drive-thru only, double-sided drive-thru, and delivery-only allows us to better meet our customers where they are at through differentiated experiences. To capture that demand we will build more new stores – with new formats, in new cities and cities we’re already in. To be clear, Starbucks has not saturated the US market,” said Sara Trilling, President of Starbucks North America
Starbucks also reaffirmed its goal of opening a further 17,000 outlets globally to reach 55,000 stores by 2030 – which, if achieved, will involve opening an average of eight new sites a day.
International outlet growth will be led by the coffee chain’s key growth market, China, where it currently operates 6,806 stores. Starbucks, which is seeking to reach 9,000 stores across China in 2025, achieved 8% year-on-year sales growth in the country to reach $841m in its fourth quarter.
“We just concluded a watershed year in China, where we put the pandemic behind us, and built growth momentum for the future,” said Belinda Wong, Chairwoman and co-CEO, Starbucks China.
The updated growth strategy is the next stage of Starbucks’ Reinvention Strategy, introduced by former CEO Howard Schultz in September 2022.
As part of the new strategy, Starbucks is also seeking to grow its global Starbucks Rewards loyalty scheme from 75 million members to 150 million by the end of 2028 and double the hourly income of its US store staff by the end of 2025, when compared to 2020 levels.
Starbucks achieved 11% sales growth in its financial year ending 1 October 2023 to reach $36bn. The coffee chain has forecast revenue growth of at least 10% and earnings growth of up to 20% across the next 12 months.