Starbucks (NASDAQ:SBUX) is embarking on a three-year reinvention and efficiency strategy with a goal to save $3 billion in costs, supporting its global expansion initiatives. Starbucks CFO Rachel Ruggeri discussed these updates and the considerations for menu prices in a recent interview.
Ruggeri explained that the $3 billion cost-saving target is divided into two main areas. The first area focuses on improving in-store operations, aiming to enhance in-store equipment and address labor costs, particularly in busier franchises. The second area, accounting for the remaining $2 billion, is centered on cost of goods sold, such as optimizing inventory ordering and reducing waste through automation and leveraging the company’s scale for more cost-efficient procurement.
The plan is already showing progress in Starbucks stores, leading to increased efficiency and better service for customers. The goal is not just to save costs but also to invest back into the business to further enhance the customer experience and drive margin expansion through strategic pricing and customization.
Despite external factors like rising student loan repayments and interest rates in the US, Starbucks is not planning substantial price increases. Instead, they see opportunities in customization and increasing food attach rates, which have already driven higher ticket averages. Starbucks aims to leverage digital capabilities, innovation, and convenience channels to sustain its momentum and continue to grow.
Overall, Starbucks anticipates long-term sales growth of 5% or more, revenue growth of 10% or more, and earnings per share growth of 15% or more through this efficiency program.
Featured Image: Unsplash @ June Andrei George
Author Stephanie Bédard-Châteauneuf 
