Starbucks Is Transforming Its U.S. Store Portfolio, Closing 400 Cafes
Starbucks announced it will close up to 400 company-operated traditional cafes in North America over the next 18 months and open a “greater number” of new stores in different locations with innovative store formats.
The news, reported in its SEC filings, comes as Starbucks announced plans to accelerate the transformation of its U.S. stores to meet evolving customer needs. The coffee retailer said it will accelerate changes due to a retail environment “shifted because of COVID-19.”
Starbucks will increase "convenience-led" formats in company-operated locations over the next 18 months, with drive-thru and curbside pickup options, as well as Starbucks Pickup locations. These store experiences are powered by the Starbucks App which is integral to ordering and paying ahead, the retailer said.
“Starbucks stores have always been known as the ’third place,’ a welcoming place outside of our home and work where we connect over a cup of coffee,” said CEO Kevin Johnson. “As we navigate through the COVID-19 crisis, we are accelerating our store transformation plans to address the realities of the current situation, while still providing a safe, familiar and convenient experience for our customers.”
The transformation includes the expansion of new Starbucks Pickup stores in dense markets including New York City, Chicago, Seattle and San Francisco, and enhancements such as curbside, drive-thru and walk up windows in suburban areas.
Starbucks will also renovate select store layouts, including adding a separate counter for mobile orders at high volume stores, which will make it easier for customers and delivery couriers to pick up their order.
The acceleration of the store transformation was shared in an open letter from Johnson as part of the company’s plan to navigate and adapt to a new COVID-19 economy and shifting consumer behaviors. Starbucks will blend the traditional sit and stay cafe with new on-the-go experiences and reposition its network of stores.
Starbucks said, following strong sales, it has committed to the expansion of the Starbucks Pickup store format. The first Pickup store has been operating in Penn Plaza in New York City since November 2019 and a second location in New York City will open at 42nd and Park near Grand Central Terminal will open soon. These locations are intended for customers in dense metropolitan markets looking to order and pay ahead using the Starbucks App on the way to their next destination.
In addition to more Pickup stores, curbside pickup is being accelerated due to the COVID crisis. Customers will soon be able to use the Starbucks App to order and pay ahead, as well as check-in at designated parking spots at the store once they arrive. Over the coming months, Starbucks will increase the number of stores that offer Curbside pickup as well as pilot a select number of locations to exclusively offer this format.
Starbucks also plans to expand and enhance the drive-thru, including opening new locations outside of densely populated cities and in new markets. The company will design new experiences that may include double lane drive-thru, or drive-thru plus curbside pickup.