Starbucks’ above-the-fold news—CEO Kevin Johnson’s retirement after 13 years with the company, with founder Howard Schultz stepping up (in interim)—wasn’t the only revelation to come from the java giant Wednesday. During the company’s 30th annual meeting of shareholders, which took place virtually, Starbucks outlined employee investments, growth goals, equipment updates, and more initiatives across a wide-range of topics it plans to tackle as the industry emerges from the COVID crisis.
Starting with employees, Rosann Williams, Starbucks’ EVP, president North America, said the chain will continue offering access to pandemic benefits for eligible workers, including: Catastrophe pay, extended childcare benefits, expanded mental health support, vaccine pay, and food and beverage allowances, as well as “partner benefits to help address unique needs in different parts of the world.”
Addressing a platform unveiled in Q1 2022, Starbucks reiterated its $1 billion investment in wages, training, and benefits. The company will increase hourly pay by an average of 17 percent over 18 months, with starting ranges of $15–$23 by summer 2022. Seniority pay will also climb up to 5 and 10 percent for employees with two and more than five years of tenure, respectively.
Lastly, Starbucks said it’s added more than 70 new staffing recruiters across markets in hopes of hiring 5,000 new employees each week.
When Starbucks announced the investment last October, the company noted 70 percent of its hourly employees over the past 12 months were new to the brand.
As recruitment and retention projects unfold, Starbucks will spend resources to better the store experience itself, the company added. That includes streamlining tasks for employees and improving craft options for guests.
Starbucks is in the process of introducing more efficient coffee brewing equipment, such as its new Mastrena II espresso machines and what it’s calling the “Starbucks Cold Brewer.” It’s also installing MerryChef ovens across “thousands of stores” to improve cook times and consistency, and deploying new, efficient handheld ordering devices to stores.
Starbucks will also launch “Shift Marketplace,” which is an app designed to make it easier for partners to switch and offer shifts virtually. The brand’s safety Lyft program, implemented so employees can grab rides home after dark, is expanding as well.
“I’m so proud of all we’ve done these past two years and how our partners inspired the best ideas to lead us through the pandemic,” Williams said in a statement. “We are just coming out of one of the most complex times of our lives, and I’m proud of how we figured it out together, in service of each other, our customers and our communities. And we are going to use this exact same approach as we build our future, the way only Starbucks can.”
Product innovation talks were led by Rachel Ruggeri, executive vice president and chief financial officer. She highlighted two pillars that have propelled growth in recent quarters—plant-based products and cold espresso. Cold beverages accounted for nearly 70 percent of Starbucks’ total beverage sales last year—up 20 percentage points over the past three calendars.
Ruggeri also highlighted “Clover Vertica,” a propriety, single cup, on-demand brewer the company expects to launch and roll out to stores starting this year.
The company described the system as follows: “The height of engineering, design and coffee quality, Clover Vertica reimagines the brewed coffee experience for partners and customers through a patented process that combines innovative vacuum-press technology with precise control over the temperature of the water and length of brew. This technology ensures that every cup of coffee is brewed to the specific roast and blend specification for the best flavor from each bean, resulting in highly defined flavors.”
Clover Vertica brewers will first arrive in Minneapolis units, as well as Reserve venues across the country, in March 2022. More units will join this fall, with plans to add the machine in all U.S. company-operated locations by 2025.
Ruggeri went on to discuss Starbucks’ “Growth at Scale” agenda, which has been a frequent point throughout the pandemic rebound.
Starbucks’ broad goal, as first touted in December 2020, remains to open 55,000 corporate and licensed units across 100 markets by 2030. Starbucks expects to return more than $45 billion over seven years to shareholders for a total of rough 40 percent of market cap as of March 4.
Ruggeri said in October Starbucks expected to add 2,000 net new locations in 2022, a significant rise from the 1,173 this past year. She said the brand “successfully completed closures” in its North America trade area transformation program and is now refocusing on growth. About 75 percent of that 2,000 aim will take shape outside the U.S., giving Starbucks global net new store expansion of 6 percent.
Brady Brewer, the chain’s EVP and CMO, guided additional goals against Starbucks’ plan to be a “resource positive company,” or to ultimately give back more than it takes from the planet. A key to reduce waste by 50 percent come 2030: The shift away from single-use plastics and piloting reusable cup programs in six markets around the world. By the end of next year, Starbucks said guests will be able to use their own personal reusable cup for every visit in the U.S. and Canada, including in-store, drive-thru, and mobile order and pay. Starbucks aim, by 2025, is “to create a cultural movement toward reusables by giving customers easy access to a personal or Starbucks provided reusable to-go cup for every visit,” it said.
The brand is currently testing multiple “Borrow-A-Cup” and reusable operating models in the U.S., U.K., Japan, and Singapore, with more countries coming on board in 2022. It’s on the verge of launching an employee waste and recycling app that shares store-specific information and notifications on how to reduce waste and recycle.
Additionally, the company shared a new pilot program with Volvo Cars that will “electrify the driving route from the Colorado Rockies to the Starbucks Support Center in Seattle.”
At year’s end, Starbucks said Volvo-branded electric vehicle chargers (powered by ChargePoint) will be available at up to 15 stores along a 1,350-mile route from the Denver area to its Seattle headquarters.
“Starbucks is spending this year testing innovative ways to reduce waste and reduce our carbon footprint,” Michael Kobori, vice president and chief sustainability officer, said in a statement. “Some of our best innovations, like the waste and recycling app, come directly from our store partners. Our store partners know their customers and communities best. When we work together with our partners, we find better solutions to create a more sustainable future for our planet and people.”
Virginia Tenpenny, vice president, chief global social impact officer and board member of The Starbucks Foundation, spoke further on the company’s “People Positive” aim. The foundation launched a new Global Community Impact Grants portfolio that commits $30 million by 2030 to drive locally relevant impact in the communities Starbucks operators. It then expanded a goal to positive impact a million women and girls at origin by 2030.
The most recent update came earlier this week, when Starbucks said it would open or dedicate 1,000 “Community Stores” globally within the decade. These locations—immersed in rural and urban areas—provide spaces for community events, partnerships with diverse artists, contractors, and sub-contractors, and support military families.