Starbucks 5-Year Plan: Lots of Stores, Food and Cold Drinks

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Offline Bipasha Matin

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Starbucks 5-Year Plan: Lots of Stores, Food and Cold Drinks
« on: December 11, 2016, 12:19:59 PM »
Starbucks aims to add nearly 50% more locations by 2021 and plans to entice people to spend more with new products, store formats and technology as the coffee chain tries to prove that it will keep growing, even without Howard Schultz as CEO.

At an investor meeting Wednesday, Starbucks discussed everything from wheat-free and gluten-free breakfast foods to a partnership with Tencent Holdings Ltd in China that will allow patrons to send Starbucks gifts through the popular WeChat messaging app.

Another tech update is that members of its rewards program will soon be able to speak or message their orders into their mobile phones. And there will be plenty of stores where they can pick up those orders. Starbucks plans to open about 12,000 new stores by 2021, bringing its total to about 37,000. In China, it plans to open more than 5,000 shops, adding to the 2,500 that are currently open. Starbucks is opening stores in China at a rate of more than one store per day.

The coffee giant's ambitious store growth plans come after a year of slower growth at its longstanding locations. Global same-store sales rose 5% in fiscal 2016, with the number of transactions up just 1%. A year earlier, same-store sales were up 7%, with transactions up 3%.

Last week, Mr. Schultz said he would hand the CEO role to Kevin Johnson in April but stay on in an executive chairman role, working on projects such as the company's Roasteries and Reserve stores.

Those higher-end concepts, and adding some Reserve elements to a larger number of traditional Starbucks shops, "create this halo over the Starbucks brand," said Howard Penney, managing director of Hedgeye Risk Management. He noted that higher pricing of the upscale products can also help mitigate slowing growth in other parts of the business.

Mr. Schultz and Mr. Johnson were among the speakers Wednesday, but the company had other executives share plans throughout the day, a not-too-subtle way for Starbucks to show the strength it believes it has in its executive lineup. Global Chief Marketing Officer Sharon Rothstein, for example, discussed some of the chain's food plans.
Sabiha Matin Bipasha

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