Business is booming.

Starbucks Talks Up Reinvention Strategy, but Is Light on Specifics

Starbucks gave a glimpse into its highly anticipated “reinvention strategy” on Tuesday, highlighting the automations it plans to deploy over the next three years, helping food and drink orders get to customers faster, while reducing employee workload. It also pointed to high-growth markets such as China, where it plans to open thousands of additional stores.

Still, the coffee giant, which has faced a spate of union activity in stores across the United States, was light on details about some of the concerns expressed by its employees, such as scheduling.

While Starbucks is largely seen as a “winner” of the pandemic, having successfully moved customers away from in-store experiences to drive-through and mobile orders, Howard Schultz, the company’s founder and interim president, said the company also had made strategic mistakes. Mr. Schultz, who replaced Kevin Johnson as chief executive five months ago, said the company had “lost its way” in certain respects.

At a meeting that occupied much of the day, Mr. Schultz and other members of the Starbucks leadership team — many of whom have been installed since he took over this spring, including newly appointed chef, Laxman Narasimhan, who will take over in April. – gave an inside look at how they planned to drive revenue and profit even higher over the next three years.

In recent months, Starbucks has seen a huge surge in revenue from younger customers ordering elaborate, cold, custom coffees such as venti caramel crunch frappuccinos. These cold drinks now account for 70 percent of Starbucks sales. So-called modifiers of these drinks — think a shot of espresso or three pumps of pumpkin sauce — now alone account for more than $1 billion in annual sales.

But the complexity of the drinks, along with the increase in orders at certain times of the day, have made the work of baristas more demanding and can sometimes lead to delays. To address that, the company unveiled a new cold drink system that reduces the number of steps it takes to make the drinks, as well as the need for employees to repeatedly bend down and dig into buckets for ice. In a demonstration of the system, two Starbucks employees showed that it took 35 seconds to make a mocha frappuccino with whipped cream, instead of 87 seconds now.

“We will never replace our baristas,” said Deb Hall Lefevre, who joined Starbucks in May as chief technology officer. “Rather, our job is to automate and simplify the work so that their job becomes easier.”

The company said it began paying all retail workers a minimum wage of $15 per hour on August 1. It introduced a new savings plan, which it said would include corporate contributions. But few details were provided about other initiatives, such as a student loan management system and a new scheduling system.

The company found that employee turnover was better than in the rest of the industry, but was still too high and that there was a focus on reducing it.

“We have failed to deliver on our commitments with our partners,” said Frank Britt, Starbucks Chief Strategy and Transformation Officer, referring to employees.

It was nearly three hours into the meeting before executives raised the issue of unionization. So far, more than 200 stores of the 9,000 Starbucks in operation have joined a union.

“When it comes to unionization, there are two avenues,” said John Culver, group president of North America and chief operating officer, who will leave the company in late September. “We can work together as partners, side by side, or we can have a third party between us. Working side by side, we can efficiently deliver solutions that support our partners in their work and support their physical, financial and mental well-being.”