What Does Starbucks’ Investor Day Mean For Shareholders & Its Future Business?

Starbucks is in a period of transition, and they’ve announced new changes at Investor Day 2022.

Thanks for subscribing to my Financial Freedom Newsletter!

Today we’ll be taking a deep dive into Starbucks’ 2022 Investor Day.

If you like these issues, be sure to tell a friend! It really helps grow the newsletter.

You can also hit me up on Twitter @DrDividend47 or email me [email protected] with feedback on issues. Help me make the best free newsletter I can!

Without further ado, let’s dive in!

______________________________________________

Today’s issue is brought to you by Vint!

Wine has been a respected asset since 6,000 B.C. It's one of the most traded commodities in the world, and it outperforms the S&P 500 by 0.1% annually.

Vint offers you fractional shares of high value wines—and now you can diversify your investment portfolio with wine!

Fine Wine is uncorrelated to the stock market and not very susceptible to macroeconomics, making it the perfect tangible asset to diversify your investment portfolio.

At Vint they offer you fractional shares of high value wines so you don't have to go through all the hassle of storing and managing physical bottles yourself!

Get started and diversify your portfolio today!

Invest in Fine Wine and Rare Spirits. — vint.co

It’s not complicated like crypto, credit derivatives, or NFTs. Our team curates collections of blue chips and up-and-coming investment-grade wines.

Starbucks’ 2022 Investor Day

Highlights

• Starbucks is back with a 5 point plan focusing on store revamping and employee benefits

• Revenue is expected to be between 10-12% for the next 3 years

• Starbucks is expanding its rewards program worldwide and is introducing NFT rewards

As some of you may know,

I am a Starbucks investor and have been buying and holding shares since 2021. Recently, I’ve been given the luxury of a big drop in share price. Shares of Starbucks hit an all-time high of $126.32 on July 23rd, 2021 and have plunged to a bottom of $68.39 on May 12th, 2022. It has recovered a bit and trades today at $92.07. I’m happy that I accumulated shares along the way because it’s turned out to be a winner for me thus far. I didn’t panic sell and I knew the company I was holding. Starbucks never disproved my investing thesis, I bought dips, and it will serve an instance where I can look back to whenever I feel like I may sell a position. Now, let’s jump into Investor Day!

The Event

Investor Day 2022 was held on September 13th, 2022 and featured the company’s reinvention plan. The event was attended by over 150 investors and company executives. It’s reported that the Cold Brew Arabica Coffee that was served was the crowd favorite drink. I don’t know about you but personally I’m a big fan of the Refreshers and the Java Chip Frappuccino (but an even bigger fan of the dividends).

The Reinvention Plan

The reinvention plan is a focus on Starbucks’ foundation: its partners, stores and customers. Starbucks calls this the “Triple Shot for Growth” and expects to deliver 10-12% net revenue growth annually over the net 3 years. Schultz has implemented his 5 Point Plan and the company will be transitioning to new leadership with Laxman Narasimhan taking over as CEO in April.

The Employee Experience

Starbucks is investing in its most valuable resource, its employees. It’s easy to forget that without employees, you have no business. Employee benefits and care is more important now than ever before due to the ongoing Great Resignation, labor shortages, and the unionization efforts being made by employees companywide.

In commitment to its employees, Starbucks is raising employee wages to a nationwide average of $17/hr. In addition, tenured employees with 2-5 years of service will at least a 5% pay increase and employees of 5+ years of service will receive at least a 7% pay bump.

If you recall when Howard Schultz returned as CEO in March of 2022, his first move was to scrap the share buyback plan. Part of the reason for scrapping the buyback plan was to invest over $1 billion into the store locations, wages and employees. Some improvements scheduled for 2022 are:

• Increased training time for new baristas

• New “First Sip” shift supervisor training program

• Student loan financing

• Profit sharing program

• In store iPad upgrades with tipping option

• Wage hikes

• New ovens & espresso machines

Speaking of new machines, Starbucks has redesigned its Cold Beverage Station to reduce the time and number of steps to make a cold beverage. It has also begun rolling out the new Clover Vertica equipment, which will freshly grind and brew a cup of coffee, on demand, in 30 seconds.

Branding Is Super Hot

Branding continues to be a high point for Starbucks. Its far and away the biggest coffee chain in the world and by locations (35,000), Starbucks is the 3rd biggest restaurant chain worldwide. Gen Z and multicultural consumers make up half its customer base & is the first choice among away-from home coffee drinkers that identify as LatinX, African American and Asian American.

Mobile Ordering Is Going Global

Mobile ordering accounts for 25% of U.S. sales and will be refreshed with changes like real-time order updates & a dedicated mobile order pick-up lane.

Starbucks also unveiled its new technology, Starbucks Connect. Starbucks connect will be implemented in all store locations worldwide and while provide a consistent Starbucks Rewards experience, including Mobile Order & Pay and a wider arrange of star redemption opportunities, no matter which Starbucks they visit.

Global Growth

Starbucks expects to grow its store count from the 35,000 locations it has today, to 45,000 stores by the end of 2025 and 55,000 stores by 2030. That is just mind-blowing. To put this into perspective, Starbucks would have to open 8 new stores per day.

Starbucks will be targeting growth in China, where it already has 6,000 locations. The goal is to have 9,000 Chinese locations by 2025, but I’m a little skeptical of targeting China as the next leg of growth. We’ve seen earlier in 2022 how frequent COVID lockdowns took an enormous chunk of profits out. Potential lockdowns or wars will not bode well for Starbucks’ expansion into China and is worth watching in the next few years.

Expansion Into NFT Rewards

Starbucks also announced its foray into WEB3 technology through a program known as Starbucks Odyssey. This marks one of the first times a big corporation has dabbled in NFTs without a bunch ambiguity surrounding it. The process is simple, rewards users will have the ability to acquire exclusive NFTs by simply making purchases they’ve been making anyways. I find this interesting for a few reasons.

1. Starbucks has intense brand loyalty, especially amongst younger people. The same demographic as people interested in NFTs.

2. NFTs allow users to keep or potentially sell their rewards on secondary marketplaces.

3. People who can’t access Starbucks’ premium products may be able to interact with the brand through NFTs, much like someone who can assess Air Jordan Shoes can buy them for a virtual avatar.

4. Typically, Rewards Programs have been seen as a limited relationship. You spend money with a company, they give you points to spend solely with them. NFT rewards are interesting because your rewards aren’t locked in with just Starbucks. This may bring about a new level of trust between consumers and corporations, and I’ll be watching to see if other companies follow suit.

Final Thoughts

After a tumultuous year for Starbucks in the headlines and in the stock price, I think they’ve got it figured out here. Investor Day 2022 has reaffirmed my confidence in the company and aside from the China plans, I think Starbucks is primed for another decade of growth.

I’ve recently wrote about how Starbucks operates as a bank and I believe that will add to growth for the company for years to come. You can check it out here 👇

What do you think about the plan moving forward? Are you a Starbucks shareholder? Let me know!

Meme Of The Week

Rumors are swirling around about Kanye West potentially severing his partnerships with the Gap and Adidas and he has described working with them as his “New Baby Mamas.” I can’t help but laugh at that.

He also appeared on CNBC looking like this:

Stocks of (former?) Kanye partnerships are all red. Not sure if this is correlated 😂

How do you interview this guy? 😂😂😂

______________________________________________

Last thing, how is this order allowed? I couldn’t make this with a straight face.

Thanks for reading, if you liked this issue remember to tell a friend!

Level Up Your Dividend Investing!

My book, “Time Is Money: How To Dividend Invest & Buy Back Your Time” is available now! The book comes with my Dividend Stocks Checklist ($7 value) absolutely FREE! Use the book to improve your dividend investing with the best strategies, and use the checklist to help weed out junk stocks and streamline your research!

Time Is Money: How To Dividend Invest & Buy Back Your Time — drdividend47.gumroad.com

I believe that we all deserve a life of financial freedom and ownership of our time. But if you’re like me, you’ve probably struggled to find a strategy that works. That’s why I wrote this book—to help you buy back your time by investing in dividend-paying companies.

Buy Back Your Time With Dividends!

Helpful Resources Are Here!

Don’t forget to check out my website full of awesome free resources to jumpstart your investing! 👇

Dr. Dividend | Linktree — linktr.ee

Here’s my list of the best resources for financial freedom, enjoy!