Starbucks is remodeling stores, expanding into suburbs, and deploying artificial intelligence to extend its reach deeper into consumers’ coffee habits, CEO Kevin Johnson told the Financial Times in a 9 December interview.
The disruptions wrought by the economic shutdown and public fears of the COVID pandemic have only paused, not halted, the company’s growth, he said.
The current year’s lockdowns imposed by politicians showed the company relied too heavily on dine-in locations in city centers, Johnson noted. As a result, Starbucks will focus more on suburban drive-through spots and urban walk-ups. The shuffle will close 1,050 U.S. stores while opening 2,150 new ones, he said.
Screw the Little People
This year, the U.S. will lose about 2,000 smaller and independent coffee shops, the market research firm Euromonitor reported.
“Smaller chains, the mom-and-pop coffee shops… don’t have the balance sheet that Starbucks has,” Morningstar investment strategist R.J. Hottovy said to the Times. “There are going to be a lot fewer coffee shops. Starbucks stands to benefit.”
Investors have noticed, pushing Starbucks’ market capitalization up 80 percent since March to a near-record $119 billion.
Starbucks could see double-digit earnings growth in 2002, RBC analysts wrote in a recent research note.
Starbucks is using its proprietary “Deep Brew” artificial intelligence software to adapt stores to varying market conditions and to further personalize relations with its loyal customers.
However, the company is not forsaking its founding vision of being “the third place” – neither work nor home – where people can gather, Johnson said. “That ‘third place’ experience will be more in demand than ever coming out of this pandemic,” he predicted.
TREND FORECAST: That a CEO of a major international firm would make such a bold statement that the company relied too heavily on dine-in locations in city centers illustrates the dystopian new ABnormal where once upon a time when people congregated socially, is now no longer acceptable.
We forecast that in a few years, when the COVID War ends, the old coffee shop, retail, restaurant, and entertainment models will return, and new models rushed into place will prove both costly and outdated.
