The notion of a Starbucks on every corner is back, with the chain planning to build more than 20,000 additional locations in the next decade after it has left the pandemic in its wake.
That goal of reaching 55,000 locations by fiscal 2030, up from nearly 33,000 today, was one of several targets laid out by the world’s biggest coffee chain at its investor day Wednesday. Also on the agenda: a boosted sales outlook, expanding margins and a long-awaited oat milk rollout across the U.S.
Starbucks, which will celebrate its 50th anniversary as a company next year, sees “a long runway of healthy growth ahead,” Chief Executive Officer Kevin Johnson said. “We are well positioned to invest in the right areas to strengthen our competitive advantage and drive consistent, sustainable growth for decades to come.”
The chain — whose business was clobbered by the COVID-19 pandemic, first in China and then in the U.S. — now sees things improving faster than expected. Starting in fiscal 2023, Starbucks predicts annual comparable-store sales growth of 4% to 5% in the U.S. and globally, and growth of 2% to 4% in China, beating its previous forecasts. It also raised its operating margin outlook.
The boosted outlook comes after Starbucks, reeling from the pandemic, accelerated a shift to more delivery and drive-thru locations earlier this year. While it has lagged rivals like McDonald’s in its recovery, with breakfast a more disrupted meal during lockdowns than lunch or dinner, the coffee company signaled the worst had past in October when it reported global same-store sales that were inching back toward normal.
Starbucks shares are up 20% this year, better than the gain of more than 13% for the S&P 500. They closed Thursday at $105.39 apiece, up 5%.
The expansion in new Starbucks stores will be partly driven in mainland China — the company’s fastest growing market — where it expects to open around 600 new stores over the next 12 months. One in 10 will be Starbucks NOW stores, a to-go format with an emphasis on speedy digital payments intended to accommodate pickups for delivery riders. In the U.S., the company expects net new store growth of about 3% starting in fiscal 2022, the lower end of its previous target.
Investments in new store formats and digital capabilities are expected to drive financial performance, the company said. Starbucks expects adjusted earnings growth of at least 20% in fiscal 2022. For fiscal 2023 and fiscal 2024, that growth will be as high as 12%. Starbucks said its Rewards members now drive almost half of revenue.
The Seattle-based company is also responding to the craze for plant-based milks that has caused oat prices to surge. It will roll out oat milk at its stores nationwide in the U.S. starting this spring, after limited tests proved successful. The company first introduced a non-dairy option in 1997 when it added soy milk to its menus. Coconut milk and almond milk followed more recently.
Earlier Wednesday, Starbucks named finance executive Mellody Hobson to lead its board as chair, making her one of the highest-profile Black directors in corporate America.
The company reiterated at investor day a commitment to cut its carbon, water and waste footprints in half by 2030. In an effort to accelerate that pledge in the U.S., the company also announced a Virtual Power Purchase Agreement with a solar farm in Virginia, among other projects.