Starbucks seeks to double rewards members to drive growth
STARBUCKS told investors on Thursday (Nov 2) that it plans to meet its growth targets by improving efficiency at its cafés while dramatically boosting its digital business and rewards programme.
The Seattle-based company plans to accelerate store renovations while opening more locations that target on-the-go customers with formats such as double-sided drive-thrus. Starbucks is also pledging to double its 75 million rewards members in five years, in part by adding partners in the finance and hospitality industries.
Underpinning the strategy will be an increased focus on efficiency, with US$3 billion in cost savings planned. Most of this will come from supply-chain improvements. Starbucks also plans to boost barista pay to more hours and higher wages.
“We see a long runway of high-return investment opportunities and changes that we believe will make us more efficient,” chief executive officer Laxman Narasimhan said.
The event was Starbucks’ first presentation for investors since founder Howard Schultz wrapped up his third stint as CEO. The company reiterated its goal of expanding its global store footprint to 55,000 in 2030 from the current 38,000.
The shares were little changed in late trading in New York. The stock rose 9.5 per cent on Thursday after the release of earnings, erasing a year-to-date decline in the first 10 months of 2023.
Last year, Starbucks unveiled a plan to overhaul cafes in a bid to help baristas manage a heavier workload amid a mass shift to online ordering and increased personalisation. Chief financial officer Rachel Ruggeri said the company will invest US$1 billion in fiscal 2024 to boost wages, upgrade equipment and improve digital and supply-chain operations. BLOOMBERG
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