Starbucks Projects Long-Term Profit, Double-Digit Revenue Growth as New Strategy Implements

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Starbucks Chairman and CEO Howard Schultz speaks at the annual shareholder meeting in Seattle, Washington on March 22, 2017.

Jason Redmond | TBEN | Getty Images

Outgoing Starbucks CEO Howard Schultz told investors on Tuesday that the coffee giant forecasts double-digit growth in sales and earnings per share as it implements a plan to reinvent the company.

The revenue forecast was slightly better than the previous long-term forecast, which was given at the end of 2020.

The new strategy aims to reflect how the coffee giant’s business has transformed in recent years. The menu has expanded and cold coffee drinks now account for 60% of year-round orders and often include add-ons such as cold foam or flavored syrups. Instead of ordering at the counter, customers go through the drive-thru or use the Starbucks mobile app.

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The company’s previous long-term forecast had forecast adjusted earnings per share growth of 10% to 12%, revenue growth of 8% to 10% and global same-store revenue growth of 4% to 5% for 2023 and 2024. Starbucks has suspended its fiscal 2022 forecast, citing lockdowns in China, investments in its US employees and high inflation.

Starbucks shares fell 2.4% in early afternoon trading.

Changes for baristas

The changes in customer ordering behavior have made cafes less efficient and increased stress for employees. According to Frank Britt, Starbucks Chief Strategy and Transformation Officer, sales peaked in 2021.

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Over the past year, Starbucks baristas have also joined unions, expressing dissatisfaction with permanent employee compensation, understaffed stores and other benefits. According to the National Labor Relations Board, more than 230 company-owned Starbucks stores in the US have voted to unionize starting Monday.

Starbucks has tried to curb 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.

As the company met with employees to flesh out its new strategy, Britt said it wanted to improve the barista experience through the lens of product management.

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“You assess consumer needs, you segment consumer needs, you run a test-and-learn agenda to find out which of the things you thought could actually be work,” he told TBEN .

The upcoming changes for American baristas are just “phase one” of a multi-year plan, Britt says. The company also wants to improve the experiences of baristas abroad and of the workers who harvest the coffee beans, work in the supply chain and provide customer support.

This is the latest news. Come back for updates.