Starbucks' Transformation... Increasing Stores and Reducing Beverage Preparation Time to 40%

Starbucks Stock Drops 24%, Company Declares 'Reinvention'
Plans to Introduce Automation Machines and Online Order Distribution Technology
Aims to Expand Global Stores to 45,000 by 2025

Starbucks announced that it will comprehensively review its business through technological innovation and expanded investment. Photo by Yonhap News

[Asia Economy Culture Young Intern Reporter] Starbucks in the United States, which has been experiencing deteriorating performance and a sharp decline in stock prices, recently appointed a new CEO and declared a business "reset" through technological innovation and increased investment. The company announced plans to invest $450 million (approximately 627.2 billion KRW) next year to improve store operational efficiency and to increase the number of stores worldwide to 45,000 by 2025.

On the 13th (local time) at the 'Investor Day' event held in Seattle, USA, Howard Schultz, Starbucks founder and interim CEO, is welcoming Laxman Narasimhan as the next CEO. Photo by Yonhap News

◆ Starbucks' 'Reinvention Plan'

According to The Wall Street Journal (WSJ) and Reuters, Starbucks unveiled its so-called "reinvention plan" at an investor briefing held at its Seattle headquarters on the 13th (local time), reviewing its caf? business from the ground up. Starbucks announced plans to enhance profitability through extensive innovation efforts, including speeding up beverage production, introducing digital order distribution technology, and increasing investment.

Howard Schultz, Starbucks founder and interim CEO, explained that by the fiscal year 2025, the company will invest $2.5 billion to $3 billion annually (approximately 3.5 trillion to 4.2 trillion KRW) to introduce new types of stores, improve facilities, enhance customer service, and reduce employee turnover. Schultz said that over the next three years, Starbucks aims to increase earnings per share by 15-20% above previous guidance and raise annual sales growth to 10-12%. Based on this, the company plans to return $20 billion (approximately 27.9 trillion KRW) to investors through share buybacks and dividends.

Specifically, Starbucks plans to increase automation within stores to provide customers with beverages and food more quickly and reduce employee workload. To this end, it will spend $450 million next year to replace coffee machines and ovens in existing North American stores with new models. Simplifying the beverage preparation process is expected to drastically reduce the time to make a Mocha Frappuccino from the previous 87 seconds to about 35 seconds, roughly 40% of the original time, significantly easing employees' workload.

Additionally, Starbucks is considering introducing technology to distribute digital orders to prevent them from concentrating at specific stores during certain times. Customized drinks like the Venti-sized Caramel Crunch Frappuccino are very popular among young customers, but since they require more effort, the goal is to enable as many stores as possible to prepare them during busy hours.

◆ Goal of '45,000 stores worldwide by 2025'

Despite increasing macroeconomic uncertainties, Starbucks has decided to actively expand its stores. The company plans to increase the number of stores worldwide from 33,833 last year to 45,000 by 2025. To achieve this, Starbucks will open 2,000 new stores in North America, including stores dedicated to beverage pickup, delivery, and drive-thru orders. In particular, it plans to nearly double the number of stores in China to 9,000.

The sales growth target has also been raised by 2 percentage points from 8-10% to 10-12% by 2025. This measure comes as a response to the combined challenges of economic recession and a surge in unionization efforts, prompting a fundamental review of the caf? business.

Meanwhile, Starbucks has announced a proactive response to unionization attempts. Starting from the 19th, it will introduce savings programs and student loan benefits for baristas. However, about 300 stores where union activities have occurred will be excluded from these benefits. Starbucks also raised the hourly wage from around $15 to $17 last month.

According to the U.S. National Labor Relations Board (NLRB), among approximately 9,000 Starbucks stores in the U.S., 224 stores voted in favor of unionization, while 52 opposed it. On the same day, Starbucks union members protested in front of the Seattle headquarters, welcoming the company's efforts to improve baristas' working conditions but criticizing the lack of sufficient reflection of union members' voices in the process.

This content was produced with the assistance of AI translation services.