Starbucks star CEO Howard Schultz revealed on September 13 that the coffee giant is expecting double digit growth over the next three years.
The global coffee chain is projecting earnings per share growth of 15% to 20% annually over the next three years, up from its projection given in 2020. Stores in the US are expected to grow at a rate of 7% to 9% annually.
Starbucks Reinvention Plan
Interim CEO Howard Schultz unveiled the Starbucks reinvention plan on September 13. The company will focus on driving growth and target investments in partners, customers, and stores in the coming years.
“As we execute on our Reinvention plan, we are building on our 51-year history of market leading innovation to position our business and our brand for the next chapter of growth,” said Schultz. “I am confident that our partners and world-class leadership team will capture the significant global growth opportunity ahead, unlocking value for all our stakeholders.”
Schultz also introduced incoming CEO Laxman Narasimhan who will officially join the company on October 1. Chief financial officer Rachel Ruggeri mentioned that making targeted investments will help drive value for customers and stakeholders. In the meantime, the company will also work on managing costs, improving margins, and enhancing the overall experience for everyone, as part of the Starbucks reinvention plan.
The company expects its global revenue to grow between 10% to 12% from 2023 to 2025, a definite leap compared to its previous estimate of 8% to 10%. The coffee giant expects to deliver net new store growth of 3% to 4% annually, up from the previous estimate of 3%. It is also optimistic about new store development in China and expects net unit growth of 13% annually.
Globally, Starbucks expects to have 45,000 stores by 2025 and is on track to have 55,000 stores by 2030, as projected on its Investor Day in 2020. As it expects its global revenue growth to increase in the Starbucks reinvention plan, it will also resume its share buyback program. The company revealed that through dividends and share buybacks, the coffee giant expects to return approximately $20 billion to its stakeholders in the next three years.
Starbucks Benefits and Union
The coffee giant is known for supporting its employees’ education plans and offering financial benefits. Newly rolled out Starbucks employee benefits, which will begin from September 19, is aimed at helping partners achieve financial stability and manage higher education debt.
Starbucks has partnered with Fidelity Investments to launch the My Starbucks Saving program. Eligible employees must contribute a portion of their after-tax salary on a recurring basis to a personal saving account. To incentivize savings, Starbucks will contribute in $25 and $50 installments at key milestones up to a total of $250 per person.
Starbucks benefits do not just end there. It is also setting up a Student Loan Management Benefit to help partners manage their debt. The tool will aid eligible US partners and their families to seek the best option to manage student loan debt, such as different repayment options and loan refinancing.
“We believe that when we invest in you and your greater aspirations we are investing in the success of Starbucks too,” said Sara Kelly, Starbucks chief partner officer. “This is just one more way we are co-creating a meaningful partner experience and a better future for Starbucks.”
The new Starbucks employee benefits are applicable to all eligible employees, with non-eligible ones being those who work at stores that have unionized. Since December, Starbucks has struggled to rein in the unionization drive. As of last month, over 200 stores have unionized and the company remains completely opposed to the transition. It continues to maintain that unionization will impact its direct relationship with its workers.
Meanwhile, some experts have called the company’s decision to withhold the benefits from unionized stores a blatant disregard of federal law.
