Starbucks on Tuesday unveiled a “Reinvention” plan to overhaul their current stores with faster technology and implement new stores that offer only delivery services and a drive-thru.
The plan will cost the company $450 million to implement and will increase Starbucks’ US store growth rate from 450 to 2,000 per year. The new plan will be rolled out next month and will take two years to fully implement.
The “Reinvention” plan also includes a new rewards system called Starbucks Odyssey and aims to automate much of the coffee-making process without cutting back on employees, said outgoing Chief Operating Officer John Culver.
The new automated systems will reduce the time it takes to make a Frappuccino from 86 seconds to 35 seconds, while the 20-hour cold brew process will soon take just 4 hours.
Starbucks founder Howard Schultz speaks with investors at Starbucks Investors Day, where he announced the company’s ‘Reinvention’ plan to create growth
John Culver, president and chief operating officer of the North American group, introduces the Siren System, an overhaul of equipment used to make drinks and prepare food in stores
Starbucks employees supporting union protest in the company’s hometown ahead of Investor Day, in Seattle
The company has seen an explosion in beverage sales, attributing much of it to Gen-Z becoming enamored with highly customized cold drinks.
“Customization is what customers really want today,” said Brady Brewer, Starbucks Chief Marketing Officer.
The numbers behind Starbucks’ excellent sales show that their cafe stores accounted for just 3% of new store openings in 2022, while drive-thru stores accounted for 86% of store openings.
The company plans to open 44% drive-thru cafe stores, 35% drive-thru only stores and 14% pick-up only stores, with cafe only stores making up just 2% of their planned openings.
Culver said existing stores designed in the typical Starbucks cafe style were built for a different time and need to be modified to meet what customers want.
Executive Katie Young indicated that stores that fail to meet demand may have to close.
Starbucks founder Howard Schultz said the Covid-19 pandemic has changed the way customers interact with the company, as they “don’t come to the store like they used to.”
He said that despite Starbucks delivery being available for only eight months, it has boosted sales using delivery apps like UberEats and Doordash.
But not everyone is happy with the announced changes – 400 protesters from Starbucks Workers United showed up in front of the headquarters.
Joe Gormley, senior equipment development team manager, shows off a Clover Vertica, a single-use, on-demand coffee maker
A union worker protesting outside headquarters said the company should hire new workers rather than upgrade their machines
The group is the most prominent in the battle for Starbucks store unions nationwide, and has so far been responsible for 244 of the company’s 8,900 Starbucks stores.
The company has taken a decidedly anti-union stance and union activists say the company has unfairly fired union supporters and denied them pay increases.
Arthur Pratt, an employee of a unionized Starbucks store in Portland, told the Seattle Times the protesters want to warn investors of the problems they face.
“We know Howard Schultz will never change his mind about unions, he made that clear,” Pratt said. “So we’re going to the investors.”
Pratt also said Starbucks should invest in hiring more employees rather than upgrading their machines and equipment. He claimed the company refused to hire its store an additional employee even when the bathroom was not cleaned.
Starbucks says the unions create a rift between employees and managers and are a “third” entity.
“We believe we can do more for our partners working side-by-side than on the other side of a negotiating table,” a Starbucks spokesperson said.
Executives told investors they believe now is the time to upgrade their operations and drive growth.
“We’re accelerating growth,” Culver said. “This is an opportunity at a time when we can reinvent the company.”