Starbucks projects long-term earnings, revenue growth in double-digits as it implements new strategy

Starbucks Chairman and CEO Howard Schultz speaks at the Annual Meeting of Shareholders in Seattle, Washington on March 22, 2017.

Jason Redmond | AFP | Getty Images

Outgoing Starbucks CEO Howard Schultz told investors on Tuesday that the coffee giant is projecting double-digit growth for revenue and earnings per share as it implements a plan to reinvent the business.

The revenue forecast was slightly better than its previous long-term forecast, which was given in late 2020.

The new strategy is meant to address how the coffee giant’s business has transformed in recent years. Its menu has expanded, and cold coffee drinks now account for 60% of orders year-round and often include add-ons like cold foam or flavored syrups. Rather than ordering at the counter, customers are going through the drive-thru or using Starbucks’ mobile app.

The company’s previous long-term forecast had projected adjusted earnings per share growth of 10% to 12%, revenue growth of 8% to 10% and global same-store sales growth of 4% to 5% for 2023 and 2024. In May, Starbucks suspended its fiscal 2022 forecast, citing lockdowns in China, investments in its U.S. employees and high inflation.

Shares of Starbucks were down 2.4% in early afternoon trading.

Changes for baristas

The changes in customers’ ordering habits have made cafes less efficient and added stress for employees. Turnover rates peaked in 2021, according to Frank Britt, Starbucks chief strategy and transformation officer.

Over the last year, Starbucks baristas have also been unionizing, expressing dissatisfaction over pay for tenured employees, understaffed stores and other working conditions. More than 230 company-owned Starbucks locations in the U.S. have voted to unionize as of Monday, according to the National Labor Relations Board.

Starbucks has sought to curb the union push by offering better wages and benefits to non-union workers. Those improvements have also helped with turnover rates in the last five months, Britt said.

As the company met with employees to craft its new strategy, Britt said it’s been looking at fixing the barista experience through the lens of product management.

“You assess the needs of consumers, you segment the needs of consumers, you do a test-and-learn agenda to figure out which of the things you thought could be true work,” he told CNBC.

The upcoming changes for U.S. baristas is just “phase one” of a multi-year plan, according to Britt. The company is also looking to improve the experiences of baristas overseas and for the employees who harvest its coffee beans, work in its supply chain and provide customer support.

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