Ahead of its annual shareholders meeting Wednesday, Starbucks said it will target two areas to boost future growth: start-ups and improving its in-store experience.
Starbucks announced a $100 million investment in a new venture fund with Valor Equity Partners, which has previously invested in Tesla and SpaceX. The fund will give the coffee giant the first look at food and retail start-ups.
Valor Siren Ventures Fund marks the first time that Starbucks has made this kind of investment, but it follows CEO Kevin Johnson’s tech-heavy focus for the company. In his roughly two years as chief executive, he has pushed the company into delivery and increased its digital engagement with customers. Prior to joining Starbucks, Johnson served as CEO of tech company Juniper Networks and as an executive at Microsoft.
Investing in start-ups has become increasingly popular in the last few years among other food companies adjusting to changing consumer tastes, an issue that Starbucks is trying to address as less customers sip its calorie-heavy Frappucinos. Struggling food giant Kraft Heinz launched its own fund in October, following the example of Big Food rivals Campbell Soup, Kellogg and General Mills.
The fund plans to raise an additional $300 million from outside investors in the coming months.
The Seattle-based company also announced plans to update its stores starting with New York City locations this summer. It teased the changes at its investor day in December. Starbucks has long branded its stores as “the third place,” a social spot between home and the office.
“I don’t want anyone to walk away today thinking this is about furniture or a new renovation strategy,” COO Roz Brewer said in a statement. “Reimagining the third place is about listening to our customers so we can better position our business now and for the future.”
Starbucks did not share how it plans to refresh the cafes nor how it will finance those plans. Brewer said the changes will focus on convenience, comfort and connection.
She provided shareholders with two examples of recent cafe updates, which reflected customer feedback. An Austin, Texas store was transformed to be “brighter, fresher, cleaner,” she said. The company changed a Glen Ridge, New Jersey location to reflect that customers used the cafe differently throughout the day. In the morning, they look for convenience, while they want comfort in the afternoon.
While the company did not provide much more detail on the renovations, the concept goes beyond that to include technology and new products.
The announcement comes as Starbucks has been working to expand delivery through Uber Eats to nearly a quarter of its U.S. locations. Other restaurant companies have been remodeling their locations to account for how delivery and digital pick-up orders change foot traffic. Chipotle, for example, is testing drive-thru lanes called Chipotlanes for digital orders only, while McDonald’s is pushing franchisees to remodel their stores with high tech updates.
Starbucks also announced Wednesday that it plans to test recyclable and compostable cups in several of its markets later this year as it looks to reduce waste.