Transforming US Store Portfolio; Closing Some 400 Locations

Starbucks Corp. will transform its US stores — and shutter up to 400 locations — as it focuses on digital integration and convenience to meet “shifting customer behaviors.”

During the next 18 months, the coffee giant plans to accelerate the expansion of convenience-led store formats such as drive-thru, mobile order only, counter pickup and curbside pickup. It also plans to relocate stores from low-traffic malls to new locations that combine the store experience with drive-thrus.

The digital pivot strategy is not new — Starbucks had been planning to roll out the changes during a three- to five-year period. But the company said it decided to push up the timeline to align with evolving customer preferences that have accelerated as a result of COVID-19, including higher levels of mobile ordering, more contactless pick-up experiences and reduced in-store congestion, all of which naturally allow for greater physical distancing.

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As part of the transformation, Starbucks will also close up to 400 company-operated stores. (Starbucks typically closes about 100 stores annually due to leases expiring and market conditions.) It also plans to relocate stores from low-traffic malls to new locations that combine the store experience with drive-thrus.

In addition to the US store repositioning, Starbucks will restructure its company-operated business in Canada during the next two years, with the potential of up to 200 additional stores closures ( with some of those stores being repositioned.) The company still plans to open approximately 300 new stores in the Americas in its current fiscal year, down from its original goal of 600. About 40 to 50 of the new locations will only offer pickup or drive-through.

“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,” said Kevin Johnson, CEO, Starbucks.

Starbucks said it plans to expand its new and well-received Pickup store format in dense markets including New York City, Chicago, Seattle and San Francisco. In suburban areas, the company plans to expand convenience-led enhancements such as curbside, drive-thru and walk-up windows.

Starbucks noted that prior to the COVID-19 crisis, approximately 80% of its US transactions were on-the-go, driven in part by the ability to order and pay ahead using its app. Citing customers’ increased use of the app to order ahead, and the national availability of Starbucks Delivers through Uber Eats, Starbucks said it will renovate select store layouts, including the addition of a separate counter for mobile orders at high-volume stores to make it easier for customers and delivery couriers to pick up their order. Here are more details about Starbucks store plans…  Chain Store Age

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