Corporate Profiles - 2020 - 106

COMPANY OVERVIEW

Starbucks Corp.
Coffee chain focusing on convenience and plant-based menu innovation
tarbucks Corp. has initiated a series of
changes in response to the coronavirus
pandemic that include the addition of
curbside pickup and pickup-only locations in
dense markets. The company also planned to
close 400 stores in North America, including
200 in Canada, over the next year.
"Starbucks stores have always been known
as the 'third place,' a welcoming place outside
of our home and work where we connect over a
cup of coffee," said Kevin R. Johnson, chief executive officer, in June. "As we navigate through
the COVID-19 crisis, we are accelerating our
store transformation plans to address the realities of the current situation, while still providing a safe, familiar and convenient experience
for our customers."
The store portfolio transformation includes
the expansion of new Starbucks Pickup stores
in New York, Chicago, Seattle and San Francisco. Convenience-led enhancements, such as
drive-thru and walk-up windows, will be expanded in suburban areas.
Store layouts will be renovated to include
a separate counter for mobile orders at highvolume locations.
Before COVID-19, approximately 80% of US
transactions were on-the-go, driven in part by

the Starbucks app, which allows customers to
order and pay ahead. The strategy of adjusting
locations through store renovations, new formats, relocations and new builds aligns closely
with evolving customer preferences as a result
of the pandemic, including higher levels of mobile ordering, contactless pickup and reduced
in-store congestion, Mr. Johnson said.
Pushing management to rethink how it
delivers its food and beverages to consumers
is the current impact and future uncertainty
caused by COVID-19. During the third quarter
ended June 28, the company recorded a loss of
$678 million, and quarterly sales fell 38% to
$4.2 billion.
"In response to clear shifts in consumer
behavior and preferences, we are now accelerating strategic initiatives for the future and
positioning Starbucks for continued long-term
growth," Mr. Johnson said. "We have moved aggressively to advance our evolution of the store

base to accommodate trends that we have long
seen emerging in our business that were only
exacerbated by COVID-19."
Another initiative underway at Starbucks is a
focus on plant-based menu innovation as part
of a sustainability commitment announced at
the beginning of the year. During the summer,
Starbucks began serving nationwide the Impossible Breakfast Sandwich, featuring Impossible
Foods' plant-based sausage, and three new nondairy beverages, including the Cold Brew with
Cinnamon Almondmilk Foam, Cold Brew with
Dark Cocoa Almondmilk Foam and Cold Brew
with Cinnamon Oatmilk Foam. Other new plantbased offerings that joined the Starbucks menu
this year include the Iced Guava Passionfruit
Drink, Iced Golden Ginger Drink and Iced Pineapple Matcha Drink, all made with coconut milk.
"Customers are looking for more ways to personalize their beverages," said Raegan Powell,
product developer for Starbucks. "We love how
the nuanced flavor you get with plant-based
milks pairs with espresso, either hot or iced."
Outside of its cafes, Starbucks is benefiting
from its global coffee partnership with Nestle
and has gained market share in packaged
coffee as consumers adjust to new at-home
routines. CP

Chief executive officer -
Kevin R. Johnson

Starbucks Corp. net earnings

(fiscal years ended in September)

Starbucks Corp. net revenues
(fiscal years ended in September)

Starbucks share price
$100

$2,885

$4,518

$3,599

2017

2018

2019

in millions

$88
$76
$22,387

$24,720

$26,509

$64
$52

106 \ October 2020

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Corporate Profiles - 2020

Table of Contents for the Digital Edition of Corporate Profiles - 2020