Starbucks Isn't Giving Up On Experiential Retail As It Plans To Open 22,000 Stores Post-Pandemic
Starbucks Corp., which has about 33,000 locations worldwide, predicts that it will increase that number dramatically over the coming decade.
“While the pandemic temporarily disrupted our business, our Growth at Scale agenda has provided the focus and discipline to deliver more consistent operating results,” Starbucks Chief Financial Officer Patrick Grismer said during the chain's biennial Investor Day last week, which was held virtually this year. “Underpinned by superior brand positioning and compelling unit-level economics, we expect our global retail store base to reach approximately 55,000 units in [fiscal 2030].”
Starbucks also reiterated its commitment to standard coffeehouses that offer coffeehouse experiences, though it is also striving to grow its takeout and drive-thru business. In a statement following the meeting, the company said that it wants to meet "the fundamental need to be seen and experience a feeling of connection to others."
Currently, roughly 65% of Starbucks’ U.S. locations are standard coffee shops alone, while 35% have a drive-thru as well. By 2023, 45% of the domestic stores will feature a drive-thru, executives said.
If the company's unit-count forecast is accurate, the growth will occur despite some of the difficulties that the Seattle-based coffee chain has suffered this year because of the coronavirus pandemic.
During the company's fiscal Q4 2020, Americas and U.S. comparable-store sales dropped 9% from a year ago, while its international comp-store sales were down 10%. Even in China, with its relatively robust economy, comp-store sales were off 3% year-over-year.
Investors seem to have confidence in the chain regardless. After a March drop in share prices, company stock is now trading for more ($103.32 per share) than it did on Jan. 2 ($89.35/share).
The company also opened 480 new stores during its Q4. Stores in the U.S. and China together total about 61% of the company’s global portfolio, with more than 15,330 and 4,700 stores, respectively. Some of its new stores include no indoor seating, offering takeout only.
The company expects U.S. store count growth of about 3% per year starting in fiscal 2022 (starting in September 2021), down from the previous growth range of 3% to 4%, according to the execs at the meeting.
Starbucks also expects the number of its non-U.S. stores to grow by about 6% annually starting in the company's fiscal 2022, though that rate is down a bit from the previous growth range of 6% to 7% for Starbucks’ international locations.
China will remain a growth hot spot, and the company predicts a percentage growth rate for its units in that country will be in the low teens starting in FY22. That is down slightly from recent growth in the mid-teens.
The coffee giant has also decided to pay all U.S. employees a minimum of $15 per hour by the end of 2023, with some pay raises beginning before the end of this year. Currently only about 30% of its workers make at least that much.