In the largest shareholder meeting in the history of Starbucks, leaders of the Seattle-based company said it will build on last year’s major milestones with a plan that calls for rapid innovation, accelerating growth, and rethinking the chain’s Third Place culture.
“It was a year of progress that amplified the importance of playing the long game,” CEO Kevin Johnson said.
The 27th annual meeting was attended by nearly 4,000 shareholders and employees in a larger venue to accommodate the company’s growing audience.
Here are five announcements from the meeting, whose key speakers included Johnson, chief financial officer Patrick Grismer, chief operating officer Roz Brewer and senior vice president of global coffee & tea Michelle Burns.
Reimagining the Third Place
Brewer said stores this year will begin a journey to reimagine the brand’s “Third Place” vision.
Former CEO Howard Schultz began using the phrase in 1984 when describing Starbucks cafes as places for people to share conversations over a cup of coffee.
“That vision remains today,” Brewer said.
With the lives of customers being so busy these days, the “third place” is more vital than ever, Brewer said.
Each store will focus on giving customers what they want: convenience, comfort and connection. Changes will focus on modernizing the experience and will occur over the next four years starting in New York City, Brewer said.
“Reimagining the third place is about listening to our customers,” she said.
It’s not just about adding new furniture or renovating a store. At a cafe in Austin, Texas, for example, she said the company learned that customers want stores to “make them feel good again.”
So the company is “making them brighter, fresher and cleaner,” she said.
The goal is to use technology, product innovation and reimagined store formats to create better experiences for guests. No matter what changes occur inside each store, Brewer said customers should walk out feeling the same way.
A customer's third place is “everywhere they hold their cup,” Brewer said.
Burns demonstrated the company’s new digital traceability technology.
Available soon through the app, the technology will allow customers to see the origin story of their coffee beans. When the Starbucks app is opened, there will be a “trace now” category.
After scanning a bag of Starbucks coffee beans, customers will discover the region where the beans came from and information about the grower. Customers will also be able to track the path it took to a roasting plant in Washington state.
“This is a tremendous milestone,” Burns said.
Burns also discussed the company’s initiative to test new “greener” cups in markets worldwide, as well as strawless lids in the U.S. and Canada.
Starbucks customers in New York, San Francisco, Seattle, Vancouver and London will help test a few different cups that will be both recyclable and compostable.
Starbucks will choose cups from the 12 winners recently announced by the NextGen Cup Challenge. The think tank created the challenge for innovators looking to develop the next generation fiber-based hot and cold cups.
Burns said each market will pilot a different cup.
Grismer said the coffee chain, which turns 48 years old this year, is in growth mode. It recently opened its 30,000th store, and that momentum will continue, he said.
“We are not a mature business whose best days are behind us,” he said. “We are continuing to grow rapidly, and we are investing behind that growth, demonstrating our belief in the power of our brand and its untapped potential globally.”
Valor Siren investment
Johnson addressed the company’s Wednesday announcement that it will be investing $100 million into Valor Siren Ventures, a new venture fund led by private equity firm Valor Equity Partners.
He called the Valor investment a “first of its kind from Starbucks.” He said it reinforces the company’s beliefs that “innovative ideas are fuel for the future.”
Bob Phibbs, CEO of New York-based consultancy the Retail Doctor, said a private equity fund will allow Starbucks to acquire new startups without the risk of damaging the Starbucks brand if new ventures don’t work out.
“Startups can launch and fail in obscurity, but Starbucks doesn’t have that luxury,” he told Nation’s Restaurant News. “In comparison to Valor Equity Partners investee Elon Musk tweeting things about Tesla that he shouldn’t, Starbucks will use this fund to keep their plans under wrap. Starbucks can double down on what its brand is known for – well-trained employees selling coffee and connecting with customers – while outsourcing the important work of innovating to those who do it best.”
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