Reimagining the Starbucks Experience
Starbucks Corp. has set its sites on reimagining the Starbucks Experience.
Key takeaways
During fiscal Q3 '22,
- Mobile Order & Pay, drive-thru and delivery also remained strong, driving 72% of U.S. revenue.
- Active Starbucks Rewards membership in Q3 totaled 27.4 million members, up 3.2 million or 13% year over year
- Cold beverages now account for roughly 75% of total beverage sales in U.S.
- North America comparable store sales increased 9%, driven by an 8% increase in average ticket; U.S. comparable store sales increased 9%, primarily driven by an 8% increase in average ticket.
- COVID-related closures in China impact the bottom line
“Our Q3 performance underscores the success of the investments we are making in our people, extending our global leadership around everything coffee and in groundbreaking beverage, food, digital and technology innovation that is deepening our connection to customers in every market and every channel,” said Schultz.
During its fiscal Q3 earnings call with analysts on August 2, Interim CEO Howard Schultz and other top executives gave a glimpse behind the curtain.
To date more than 100 co-creation session have been held where partners and leaders “collaborated on how to best reimagine the next Starbucks,” Schultz explained. “And from these sessions, our reinvention plan has taken shape. Today, over 30 cross-functional teams are focused exclusively on executing the U.S. reinvention plan you will see take shape over the quarters ahead. And in time, you will see best practices shared around the world.”
Digital Innovations on the Horizon
The launch of Starbucks Web 3.0 and a platform for NFTs are in the works. Schultz teased details about digital innovations that are underway at the coffee company. … "We have been working on a very exciting new digital initiative that builds on our existing industry-leading digital platform and innovative new ways, all centered around coffee and, most importantly, loyalty," he said.
“We believe this new digital Web 3-enabled initiative will allow us to build on the current Starbucks Rewards engagement model with its powerful spend-to-earn Stars approach while also introducing new methods of emotionally engaging customers, expanding our digital third place community and offering a broader set of rewards, including one-of-a-kind experiences that you can't get anywhere else, integrating our digital Starbucks Rewards ecosystem with Starbucks-branded digital collectibles as both a reward and a community building element. This will create an entirely new set of digital network effects that will attract new customers and be accretive to existing customers in our core retail stores.”
The company will share the details of its reinvention plan at its investor day on September 13, Schultz said.
A New Direction
Frank Britt, Chief Strategy Officer, said, the team has “prioritized five major strategic shifts to pivot the U.S. business in a new direction.”
1. Focus on better integrating Starbucks’ culture and values across the three cohorts of its retail partners, operations partners and support center partners.
2. "We are fully embracing the need to radically improve our in-store partner experience," Britt said.
Employee Matters
Improvements include wage acceleration for all U.S. in-store partners, doubling in-store partner training investments, reintroduction of the Black Apron and Coffee Masters credential, and the implementation of a new digital partner engagement platform.
A universal tipping and a new recognition and badging platform are expected to be rolled out by the end of the year, he said.
3. Reimagining the Starbucks Stores
“Innovations such as new bar configurations, patented coffee technology, novel store prototypes are high priorities in the plan designed to improve throughput and heavily customized beverages, along with both customer and partner experience,” Britt explained.
4. Creating a Unique & Personalized CX
“… Each individual consumer must be provided a uniquely personal experience that is unified across channels. Building on our strong track record of superior customer engagement, representative initiatives in this sphere included a reimagined approach for customer-facing products and platforms, new models of effortless digital ordering and further growing the value proposition of our loyalty programs through novel and new strategic partnerships.
5. Redesign what partnership means at Starbucks
Britt said the company will evolve “from a listening company to a co-creation company. This will translate into new approaches to shared innovation, shared accountability and shared success. This is both a competitive and a generational necessity.”
Key takeaways from the Q3 earnings call:
- Mobile Order & Pay, drive-thru and delivery also remained strong, driving 72% of U.S. revenue.
- Active Starbucks Rewards membership in Q3 totaled 27.4 million members, up 3.2 million or 13% year over year
- Cold beverages now account for roughly 75% of total beverage sales in U.S.
“Our Q3 performance underscores the success of the investments we are making in our people, extending our global leadership around everything coffee and in groundbreaking beverage, food, digital and technology innovation that is deepening our connection to customers in every market and every channel,” said Schultz.
The full earnings release is available on the Starbucks website.
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