Starbucks is unveiling its “reinvention” technique at Tuesday’s investor day

Starbucks CEO Howard Schultz in New York City.

Steven Ferdman | Getty Images

Starbucks is expected to unveil a reinvention plan Tuesday as the coffee giant grapples with changing consumer behavior, outdated store designs and a union push in the United States

The strategy is the brainchild of outgoing interim CEO Howard Schultz, who returned to the helm in the spring following Kevin Johnson’s resignation. Schultz will relinquish the reins to new CEO Laxman Narasimhan in April, but will stay on to help implement the plan.

Starbucks said Tuesday’s investor day in Seattle will include presentations and a question-and-answer session with leadership, but it’s unclear if Narasimhan will be speaking to investors for the first time.

Schultz’s new strategy aims to address how the coffee chain plans to drive growth in a post-pandemic world. The company’s shares are down 24% year-to-date, dragging its market value down to $102 billion. A slow recovery in China, the union push in the United States and broader economic uncertainty have weighed on the stock, but Wall Street approval of the reinvention plan could revitalize shares.

In August, Schultz told investors the plan would address “increasing efficiencies” at U.S. cafes, with changing consumer behavior amid the pandemic. Customers are increasingly ordering their coffee using their phones or drive-thru lanes instead of sitting in coffee shops. Three-fourths of beverage orders last quarter were cold beverages, typically with expensive extras.

But the company is also trying to reassure baristas who have complained about staff shortages and overwork. More than 230 company-owned cafes across the US voted to organize under Workers United. The Schultz-led company has worked to curb union support, including refusing to give unionized cafes higher wages and sacking organizers.

The union push has slowed in recent months, but Starbucks is still struggling with high turnover. According to the Wall Street Journal, a quarter of US baristas quit their job within 90 days, up from about 10% before the pandemic.

Additionally, Wall Street expects an update on the company’s long-term outlook on Tuesday. In May, Starbucks suspended its guidance for fiscal 2022, citing lockdowns in China, investments in its US workforce and high inflation.

The company’s previous long-term guidance called for adjusted EPS growth of 10% to 12%, revenue growth of 8% to 10%, and global same-business revenue growth of 4% to 5%. Barclays analyst Jeffrey Bernstein wrote in a note to clients that he believes most investors would prefer the company to slightly lower its outlook so it can consistently beat expectations and raise its guidance.

Last quarter, Starbucks reported global same-store sales growth of 3%, driven by strong demand in its home market. But Covid-19 restrictions in China hurt same-store sales growth in that market, its second-biggest.

Investor Day on Tuesday is scheduled to start at 10:30 a.m. and end at 6:00 p.m. EST if you want to watch Starbucks investors day live.

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