It’s another growth accelerator,” said Brady Brewer, chief marketing officer at Starbucks. “More and more customers are looking for food at Starbucks. Cold beverages aren’t the only products driving sales. Starbucks says that most of its customers are millennials or Generation Zers who prefer cold beverages, which account for 70% of the company’s US sales (up to 80% in the summer). The company now receives 25% of its orders via cellphone apps, and 50% of its business is take-out. It’s a reinvention that actually began during the pandemic, when Starbucks had a negligible home delivery service. We’re just reinventing how we do it,” said Schultz. “We’re reinventing the company, but we’re not reinventing what we do. The Investor Day included announcements of new products, like next winter’s big launch of a pistachio, cocoa and citrus-flavored cold brew (Pistachio Creme Cold Brew), demonstrations of time-saving coffee makers, and optimistic business initiatives with promises of multi-million dollar dividends. “Don’t worry,” joked a Starbucks executive, “we have plenty of coffee.” It was a six-hour marathon of presentations liberally sprinkled with references to reinvention. Schultz, who promises that his third retirement will be his last, unveiled a road map to Starbucks’ future for the investors and analysts assembled at the company’s Seattle headquarters. Narasimhan, who made his debut at the Investor Day, told the audience, “I came to this country with nothing. In April 2023, he will be succeeded by Laxman Narasimhan, a former Pepsico executive. Now Schultz is back again after another global crisis – the Covid-19 pandemic – but this time he vowed to stay for just one year. He returned in 2008 to lead Starbucks out of the global financial crisis by closing unprofitable locations, revamping his management team, and implementing new growth initiatives such as the loyalty program and expansion into China. It has 35,000 locations in 80 markets and more than 400,000 employees, including franchises. Howard Schultz is credited with transforming the small, Seattle-based coffeehouse chain that in 1987 had just a dozen coffee shops into a global icon with a $100 billion market capitalization. In mid-September, Schultz opened the Starbucks Investor Day in Seattle (Washington, USA) with this anecdote, as a prelude to the company’s reinvention plan for the future. Today, Starbucks has 400 locations in Tokyo and 1,800 throughout Japan. That’s when we knew that we were okay,” said Schultz. “We cut the tape and a young man, who didn’t speak a word of English, rushed to the coffee bar and ordered a double tall latte. At first, he thought someone had hired move extras to fill out the crowd, but someone told him that many of the eager customers had been waiting in line all night. Schultz didn’t sleep well that night, but when he arrived to open the store in Tokyo’s Ginza shopping district, he saw a line of customers stretching around the corner. The day before the grand opening, Schultz told his Japanese partners through an interpreter, “It’s going to be a rough day,” which the interpreter timidly translated as, “It’s going to be a historic day.” At the time, Starbucks still only served hot coffee, which would be their excuse if the venture failed. But in 1996, Schultz decided to take a chance and partnered with a local company to open stores in hot and humid Tokyo.
The company’s no-smoking policy, the country’s high rental costs, and the Japanese aversion to eating out would doom the initiative. The consulting firm’s report was blunt – expansion into Japan would be a complete failure. When former Starbucks CEO Howard Schultz was considering whether to expand Starbucks outside the United States, he first thought of Japan, but his board of directors advised him to hire a consulting firm because the management team had no international experience.
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