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What Starbucks Sees For Its Next Five Years

Starbucks is a massive coffee giant that already books around $21 billion in annual revenue and outgoing CEO Howard Schultz promises more heady growth will come in future years.

“If Starbucks were a 20 chapter book, I still think we are in chapter four or five,” Schultz said at the company’s bi-annual investor presentation held in New York City this year. “Our industry-leading pipeline of innovation is more robust than ever.”

Less than a week after Starbucks (SBUX) generated major headlines when it was announced Schultz would step down from his CEO role in 2017, the company set financial targets that would be aggressive for almost all peers in the retail world that are as big as Starbucks. The coffee purveyor’s five-year plan includes expectations of revenue growth of 10%, earnings growth between 15%-20%, and mid-single digit comparable sales growth at existing stores for each year.

 

What will fuel that growth? New store openings will help. The global footprint stands at around 25,000 stores today and Starbucks sees expansion by an additional 12,000 by 2021. Starbucks is also benefiting from stronger new-store performance in the U.S. than in years past, a bet on mobile that is driving traffic, and a brand that Schultz argues is increasingly relevant at a time when many brick-and-mortar retailers are facing store closures and weak traffic trends.

In the earliest comments from Schultz, he especially stressed that the Starbucks brand was strong despite some worries heading into the presentation that sales growth has been slowing in the U.S.

“[There is] no evidence of cannibalization,” Schultz said. He made that vow despite the “slight slowdown—slight—in comps that has you all so nervous.”

With Schultz planning to step down from the CEO role next year, the next phase of growth will be steered by Kevin Johnson, who currently serves as president and chief operating officer. His background in tech will likely help Starbucks as it invests more in mobile. Mobile payments now make up 25% of all transactions at Starbucks and that figure will almost certainly increase over time.

There’s also more sales to be gained from the increased attention on premium, pricier coffees and retail experiences. That effort is to be steered by Schultz, who promises high-end reserve stores and massive roastery concepts will fuel sales and elevate the core brand even further.