Introduction to Starbucks’ New Strategy
Starbucks says it will "sunset" its pick-up only concept stores across the country as the company moves to evaluate its portfolio of coffeehouses across the U.S.
Starbucks CEO Brian Niccol announced the change during an earnings call Tuesday, as part of the company’s "evaluation" of Starbucks’ North American portfolio, to ensure it has "the right coffeehouses in the right locations to drive profitability and deliver the Starbucks experience."
Reason Behind the Change
As part of the evaluation, Niccol said, Starbucks will "sunset" some of its pick-up only concept stores that launched in 2019. According to the company, there are currently between 80 and 90 of these types of stores across the U.S.
"We found this format to be overly transactional and lacking the warmth and human connection that defines our brand," Niccol said. "We have a strong digital offering and believe we can deliver the same level of convenience through our community coffeehouses with a superior mobile order and pay experience."
The Pick-Up Store Concept
Starbucks launched the pick-up store concept in 2019 as stores "exclusively designed for mobile orders and quick pick up without the wait." There are nearly 100 pick-up only locations across the U.S., including inside some airports, according to the company website.
Future of Pick-Up Locations
According to the company, not all pick-up locations will close. Some would be converted to traditional coffees houses with seating, Starbucks said.
Back to Starbucks Plan
The move comes as Starbucks undergoes a number of changes as part of a "Back to Starbucks" plan that better prioritizes customers service and what the company calls as "the coffeehouse experience."
"Customer connection scores are up and customer complaints are down, both quarter-over-quarter and year-over-year," Niccols said.
Investment in Renovations
Niccols also said Starbucks was investing approximately $150,000 per store for quick renovations it described as "uplifts."
"Uplifts are intended to quickly replace thousands of seats we removed and introduce greater texture, warmth and layered design," Niccols said. The process is underway at stores in New York, with uplifts also planned in Southern California. The company also has a new "standalone protoype" store set to open in New York.
Affected Locations
According to the company website, the following Starbucks stores are pick-up only. It wasn’t immediately clear if any of the Illinois locations were slated for closure, or would be converted.
- 55th & Woodlawn – Hyde Park
- 227 W. Monroe – Chicago
- 555 S. Dearborn – Chicago
- 2063 N. Clark – Dickens
- Addison and Sheffield – Chicago
- Golf & Higgins – Schaumburg
- Lake & Waukegan – Glenview
- Lima & Ludwig – Fort Wayne
- Plainfield-127th & Route 59
- Prentice Women’s Hospital – Chicago
- Wrightwood & Racine – Pick Up
Conclusion
In conclusion, Starbucks’ decision to sunset its pick-up only concept stores is part of a larger strategy to evaluate and improve its portfolio of coffeehouses across the U.S. The company aims to prioritize customer service and the coffeehouse experience, and believes that its community coffeehouses with superior mobile order and pay experiences can deliver the same level of convenience as the pick-up only stores.
FAQs
Q: Why is Starbucks sunsetting its pick-up only concept stores?
A: Starbucks found the pick-up only format to be overly transactional and lacking the warmth and human connection that defines its brand.
Q: How many pick-up only locations will be closed or converted?
A: There are currently between 80 and 90 pick-up only locations across the U.S., and not all of them will be closed. Some will be converted to traditional coffeehouses with seating.
Q: What is the "Back to Starbucks" plan?
A: The "Back to Starbucks" plan is a strategy to prioritize customer service and the coffeehouse experience, and to deliver the same level of convenience through community coffeehouses with superior mobile order and pay experiences.
Q: How much is Starbucks investing in renovations?
A: Starbucks is investing approximately $150,000 per store for quick renovations, known as "uplifts", to introduce greater texture, warmth, and layered design.
