Starbucks launches plan to cut $3 billion in costs over three years
Starbucks Coffee Company has announced Triple Shot Reinvention with Two Pumps – a long-term growth plan for brand elevation, global expansion, and cost efficiency.
The company described the strategy as the “next step in the re-founding of the company” to deliver significant value to partners, customers and shareholders.
The plan includes three priorities – elevating the brand, strengthening and scaling digital, and becoming truly global – along with “two pumps” – unlocking efficiency and reinvigorating the partner culture.
The firm expects to generate US$3 billion in savings over three years, with $2 billion outside the store from the cost of goods sold. This will enable the company to reinvest in the business and deliver returns to shareholders through earnings growth.
Regarding brand elevation, Starbucks will focus on running better stores, growing the portfolio with more purpose-defined stores and renovations, and driving product innovation.
The company intends to double its 75 million global Starbucks Rewards Members within five years and expand digital and technology collaborations to elevate the partner and customer experience.
To become a more global brand, it has a goal to reach 55,000 locations across the world by 2030. The company currently has over 38,000 stores, with about 9000 new openings in the past five years.
Starbucks will also reinvigorate the partner culture through continued investments in the partner value proposition across the partner experience.
Global store sales continue to rise
For FY23, Starbucks recorded an 8 per cent increase in global comparable store sales, with North America and the US up 9 per cent and international up 5 per cent.
The company’s consolidated net revenues rose 12 per cent to a record $36 billion, excluding a 2 per cent unfavourable impact from foreign currency translation.
CEO Laxman Narasimhan said the company achieved strong results for the fourth quarter and full fiscal year, which are on the higher end of its full-year guidance.
“As we enter the current year, in the face of macro uncertainty, we remain confident in the momentum throughout our business and headroom globally,” Narasimhan added.
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