AI Boosts Coffee Sales? Starbucks Invests 220 Million to Establish AI Company

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The news of the official establishment of Starbucks (China) Innovation Technology Co., Ltd. has garnered significant attention. This wholly-owned subsidiary of Starbucks Coffee (Cayman) Holdings Ltd. boasts a registered capital of 222 million yuan (approximately $34 million) and covers a wide range of business activities, including software development, software sales, AI application software development, AI foundational software development, AI theory and algorithm software development, IoT device manufacturing, computer system services, big data services, and supply chain management services. This move signifies that the world-renowned coffee chain giant is further strengthening its technological and digital development efforts in China.

In fact, in recent years, Starbucks has been actively seeking transformation and utilizing new technologies to improve customer experience. As early as 2019, Starbucks launched its own AI platform Deep Brew, primarily used for optimizing store workforce allocation and managing inventory tasks. Meanwhile, in its latest restructuring plan, Starbucks proposed focusing on developing personalized services, increasing automation, and changing operational models to meet the diverse needs of younger consumers.

The newly established Starbucks (China) Innovation Technology Co., Ltd. will drive the company's progress in technological innovation and digital transformation. It is reported that the company will be led by Luo Jinpeng, CTO of Starbucks China, who previously served as President of Umeng+, Alibaba's data intelligence service provider, bringing extensive experience and professional expertise.

As market competition intensifies and consumer demands for service quality continue to rise, companies like Starbucks must constantly evolve and progress to maintain their leading position. With the rapid development of technology, AI has become a crucial tool across many industries. To better adapt to market changes and enhance service quality, Starbucks has decided to establish a research and development company in China focused on artificial intelligence technology, marking the company's determination and commitment to technological and service excellence.

As is well known, the coffee industry has traditionally been labor-intensive, but the situation is now changing. With the development of digital technology, the coffee industry also needs to gradually incorporate more intelligent elements. Therefore, Starbucks has established this new company specializing in software development, AI software R&D, and big data analytics to enhance its competitiveness. Through this approach, Starbucks can improve customer experience, strengthen its brand image, and ensure it maintains an edge in future competition.

In China, Starbucks stores continue to expand. In these stores, the application of AI technology can not only reduce labor costs but also improve efficiency and service quality. With the help of big data and AI technology, Starbucks can better understand customer needs and meet their demands. Moreover, this innovative tech company can bring more new opportunities to the Chinese market, including but not limited to vending machines, self-checkout systems, and other innovative solutions.

In early November, Starbucks Global CEO Laxman Narasimhan announced a major strategic decision for the company—to accelerate its digital transformation and global expansion. During the event, he specifically mentioned two significant investment projects in China: the Innovation and Technology Center in Shenzhen and the Coffee Innovation Industrial Park in Kunshan. The advancement of these projects is expected to enhance the company's productivity and technological capabilities.

While establishing new companies, Starbucks' financial condition remains robust. As of the fourth quarter of fiscal year 2023, Starbucks' global consolidated net revenue reached $36 billion, marking a 12% year-over-year increase. Revenue from the China region stood at $840.6 million, showing a 15% growth year-over-year after adjusting for currency fluctuations. Additionally, the number of Starbucks stores in China continues to rise, reaching 6,806 by the end of the fourth quarter, a 13% increase compared to the previous year.

In today's increasingly competitive landscape, brands must continuously improve to attract customers, and artificial intelligence is undoubtedly one of the most effective means. In the long run, Starbucks' efforts will further drive technological innovation in the coffee industry, providing consumers with greater convenience and premium services.