Starbucks Chairman and CEO Howard Schultz speaks at the annual shareholder meeting in Seattle, Washington on March 22, 2017.
Jason Redmond | AFP | Getty Images
Outbound Starbucks Chief Executive Howard Schultz told investors on Tuesday that the coffee giant is targeting double-digit growth in revenue and earnings per share as it executes a plan to reinvent the business.
The revenue forecast was slightly better than its previous long-term forecast, which was given at the end of 2020.
The new strategy is to address how the coffee giant’s business has changed in recent years. Its menu has expanded, and cold coffee drinks now make up 60% of orders year-round and often include add-ons such as cold foam or flavored syrups. Instead of ordering at the counter, customers drive through or use the Starbucks mobile app.
The company’s previous long-term forecast called for adjusted EPS growth of 10% to 12%, revenue growth of 8% to 10% and global same-store sales growth of 4% to 5% for 2023 and 2024. Starbucks suspended its forecast for fiscal 2022, citing the quarantine in China, investment in its US employees and high inflation.
Shares of Starbucks were down 2.4% in early afternoon trading.
Changes in customer ordering habits have reduced the efficiency of cafes and increased stress for employees. According to Frank Britt, Starbucks’ head of strategy and transformation, the turnover rate will peak in 2021.
Over the past year, Starbucks baristas have also unionized, expressing dissatisfaction with pay for permanent employees, understaffing and other working conditions. More than 230 company-owned Starbucks locations in the U.S. voted to unionize as of Monday, according to the National Labor Relations Board.
Starbucks tried to reduce union pressure by offering better wages and benefits to non-union workers. Those improvements have also helped with turnover rates over the past five months, Britt said.
When the company met with employees to craft its new strategy, Britt said it was trying to fix the barista experience through a product management lens.
“You’re assessing consumer needs, segmenting consumer needs, doing an agenda of testing and learning to find out which of the things you thought might be true,” he told CNBC.
The coming changes for American baristas are just the “first phase” of a multi-year plan, according to Britt. The company is also looking to improve the experience of baristas overseas and for employees who harvest its coffee beans, work in its supply chain and provide customer support.
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