Starbucks investor day — the widely anticipated annual event that was expected to usher in a new era of leadership and give details on the company’s teased reinvention plan — started with an introduction of a new beverage and ended the morning session with the discussion of store growth.
While big news was promised, the Seattle-based company mostly addressed investors in vague terms about the future of the Starbucks brand, from digital innovation (including its just-announced foray into the metaverse), and how the company plans to address turnover rates and the growing unionization movement systemwide.
Here is what we learned from tuning into the morning session of Starbucks investor day on Tuesday:
Starbucks is investing $450 million in equipment automation
One of the highlights of Tuesday’s presentation was the demonstration of new equipment that can cut the average time it takes to make a Frappuccino from almost a minute and a half to just over 30 seconds, simply by adding an automated ice dispenser and whipped cream dispenser and removing the need to bend down to scoop ice from a bucket.
The technology is being dubbed the proprietary siren system and while it might sound like it’s designed to eliminate barista jobs due to staffing shortages, outgoing Starbucks COO John Culver clarified that the purpose is to make baristas’ jobs easier and less tiresome so they have more energy to pour into drink creation and customer interactions.
The leadership blames themselves for employee dissatisfaction
While unions were never outright mentioned during the Investor Day presentation, their impact was implied when outgoing interim CEO Howard Schultz discussed the current wave of dissatisfaction among staff members, comparing it to 2008 (or the last time he returned to fix Starbucks) when sales and shares were down significantly for the company.
“2008 is not a proxy for what is now happening in 2022 – there is no proxy for the pandemic,” Schultz said Tuesday. “But there were self-induced mistakes that were made again where we lost our way.”
So, where did Starbucks lose its way? According to Schultz, the company was not listening to what staff wanted and needed, namely — flexible scheduling, equipment that doesn’t make their jobs harder, better pay, and more discernible career paths.
Partner experience innovation center
To address some of these issues, Starbucks will be opening what it is calling a partner experience innovation center, where, much like a test kitchen, the coffee chain will be able to test out employee benefits and experiences.
“Partner store agenda is as important as it’s ever been,” Frank Britt, executive vice president, chief strategy and transformation officer, said Tuesday. “It’s a new way to bring high performing capable machine that works for customers and partners.”
Most recently, Starbucks announced new benefits to non-union members that will help employees start savings programs and navigate student loan payments and hinted that more benefits targeting mental health could be coming soon.
There were no further details on when or where this innovation center would open.
The third place is changing
There have been hints for a long time now that the Howard Schultz-created third place concept, where Starbucks cafes are open to everyone in the community, would be changing to address health and safety concerns. While Starbucks did not outright say that this would be the case during investor day, it was implied that the definition of third place is evolving to include positive interactions via the drive-thru or takeout windows, and not just for those that want to hang out in their cafes.
“The third place isn’t just a place; it’s a feeling,” Brady Brewer, chief marketing officer at Starbucks said. “The third place isn’t going away-- We have more third places now than throughout our history. We’re reaching people in new ways like mobile order, drive thru delivery, etc.”
Starbucks has seemingly redirected the concept of third-place to mean “personalized and sometimes unexpected positive customer interactions” and shied away from describing Starbucks as a free community gathering place, likely as a silent nod to Howard Schultz’s concerns (and later closure of) stores with safety issues.
New store prototypes
Another topic that Starbucks mentioned but did not delve into too much detail about is the reinvention of their store portfolio with new convenience-focused prototypes.
“Our physical stores have to change — they were built for a different era,” Culver said. “We have to reduce complexity and increase experimental convenience.”
Part of that reimagining includes adding the aforementioned new equipment but also new goals like increasing accessibility, and designing “purpose-built stores,” like more drive-thru and express store formats.
Starbucks is finally partnering with DoorDash
Starbucks announced Tuesday that it will be delivering coffee on the DoorDash platform now, seven years after first announcing delivery with Postmates and four years after adding Uber Eats to its delivery partnership roster.
The company just announced a pilot program and will be available via the DoorDash app nationwide in 2023.
New menu items and future product lines revealed
Starbucks opened the investor day with a taste test of the new pistachio cream cold brew coming in 2023 and topped with cocoa dusting and a “citrus spritz” — a drink that was inspired by the pistachio latte available in Roasteries.
Moving forward, Starbucks hinted at an expanded product line of available food menu items, including the ability to make pastries in-house, introduce portable salads, and add plant-based items and more egg-based products.
Starbucks Rewards now work with outside companies
Soon you’ll be able to earn Starbucks stars by booking flights or spending money at specific retailers through a program called Reward Together, with partnerships “being announced soon.”
Contact Joanna at [email protected]
Find her on Twitter: @JoannaFantozzi
