Starbucks (SBUX 2.29%) is facing some challenging headwinds right now. Stores are unionizing, costs are rising, and its high-priced coffee is starting to look more unaffordable in the midst of inflation. Down 27% year to date, shares of Starbucks have performed slightly worse than the S&P 500's 23% slump.

But how does Starbucks' business look in the longer term, and should you consider buying the stock on the dip today?

More stores, and smaller spaces?

Last month, Starbucks held a biennial Investor Day where it announced many ambitious targets. A couple of the ones that stood out to me were that the coffee chain's plans to open 20,000 more stores, and it's also going to focus more on a variety of smaller formats. 

Today, the company has 35,000 stores around the globe and by 2025 it plans to expand that number to 45,000. By 2030, it plans to have 55,000 stores up and running. That's a 57% increase within eight years, which is no small task.

One of the ways Starbucks is going to achieve this without breaking the bank is by utilizing smaller store formats that can help provide customers with more convenience. Starbucks noted that it "sees tremendous opportunity to further diversify and expand formats across cafes, pick up, delivery-only and drive-thru only locations." Those types of locations would make it easier for customers to make mobile orders, which could make the process more efficient. Plus, smaller-store formats would also allow the company to hire fewer staff per location, potentially leading to more profitability.

Data from Placer.ai, a location analytics company, suggests that this could unlock a huge growth opportunity for Starbucks. When looking at the past 12 months, Placer.ai's data found that for Starbucks' smaller locations (e.g., 400 square feet), the company generated 15% more visitors per square meter when compared to its regular-sized locations, which are about 2,000 square feet.

Starbucks didn't specify what kind of split (small versus large) it's looking at with respect to new store openings, but smaller stores would allow more room for the company to expand rapidly while becoming more efficient and profitable along the way.

The company is expecting plenty of growth

Starbucks wasn't shy when posting its projections for the future on Investor Day. From fiscal 2023 to fiscal 2025, it is forecasting global revenue to rise between 10% and 12%. On the high end, that's a tad more than what it averaged between 2010 and 2019, before the pandemic shook up the global economy:

SBUX Revenue (Annual YoY Growth) Chart

SBUX Revenue (Annual YoY Growth) data by YCharts

However, by rapidly opening more stores and focusing on efficiency, generating up to 12% growth doesn't appear to be all that unlikely for the business. Plus, another growth opportunity that Starbucks is pursuing includes offering more ready-to-drink products, which are available outside of its retail stores. This is another area where Starbucks can expand its portfolio, reach more customers, and increase sales.

Is Starbucks a buy today?

Starbucks is facing some challenges this year and it wouldn't be surprising if the stock were to continue falling as inflation takes its toll on the business. In the longer term, the picture looks much more promising.

If you're willing to buy and hold while the company undergoes what looks to be a significant and meaningful transition, Starbucks could make for a solid investment. The changes it is making to its business to get leaner and more efficient could lead to solid returns in the long haul.