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Starbucks Eyes Walk-Through Stores And Technology To Power Post-Pandemic Growth

Published on Dec 11 2020 12:28 PM in Restaurant tagged: Starbucks

Starbucks Eyes Walk-Through Stores And Technology To Power Post-Pandemic Growth

After efforts to expand US suburban drive-through locations, Starbucks is creating a similar experience for customers on foot. Orders are to be primarily digital, paid for in advance, as the compan...

After efforts to expand US suburban drive-through locations, Starbucks is creating a similar experience for customers on foot.

Orders are to be primarily digital, paid for in advance, as the company shifts to new store formats in response to changing habits.

"What we're trying to do is build the equivalent of a drive-through in a dense metropolitan area, which I think of as a walk-through," Starbucks Corp CEO Kevin Johnson told Reuters in an interview.

In the United States, the stores are called Starbucks Pickup. In mainland China, which is the chain's fastest growing market, they are called Starbucks Now and will make up 10% of the 600 stores that it plans to open there in the next year.

Within a three- to five-minute walk of these locations will be traditional Starbucks cafés, Johnson said.

Broadly, Starbucks is closing some under-performing locations and relocating others, while adding new to-go locations, traditional cafés and suburban drive-throughs where possible.

It expects to grow nearly 70% to 55,000 locations globally by fiscal 2030. It is among several big restaurant chains likely to become even larger after the pandemic.

Even so, that is approximately 6% of net store global growth annually starting in 2022, at the lower end of a previous growth range of 6% to 7%.

On Wednesday December 9, Starbucks said that it will launch oatmilk in all of its US stores in the spring of 2021 and roll out new menu items, including a Shaken Iced Espresso with brown sugar and oatmilk.

Starbucks projects earnings per share growth of at least 20% in fiscal 2022, and 10% to 12% growth in 2023 and 2024.

The company reiterated previous guidance of adjusted profit for fiscal 2021 between $2.70 and $2.90 per share.

Artificial Intelligence

For future growth, Johnson said that Starbucks will lean on artificial intelligence - a suite of products that Starbucks calls Deep Brew - to give store managers an edge in how they run their locations. The goal is not to displace employees, but to have them focus on customer service instead, he said.

The technology can create staff schedules and automate inventory management. It is already used to generate personalised deals for Starbucks Rewards members.

And Starbucks is using AI to assess local COVID-19 cases, customer preferences and employee sentiment in order to recommend, on a store-by-store basis, whether and how to slowly reopen locations.

"A Way To Navigate Through This Virus"

"We've got a way to navigate through this virus," Johnson said. "And certainly as vaccines come and we start turning up the dial, I have no doubt in my mind the customer response coming to Starbucks is immediate, because we have seen it as we open up limited seating."

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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