Executive Briefing

Rethinking the Starbucks ‘third place’

Starbucks is betting on a smaller, more efficient ‘Pickup’ concept in big cities. But what else?

Starbucks Pickup
Courtesy Starbucks

Starbucks, while lacking recent cultural or culinary relevance, has long been fascinating because of its early and successful investments in digital products, including its own pioneering digital payments, loyalty program, and mobile ordering systems.

It’s also in an interesting spot right now, coming out of the Covid-19 lockdown. While 95% of its US company-owned stores have reopened, sales were still down almost 30% at locations that were open during the last week of May, according to a US Securities and Exchange Commission filing (pdf) this week.

Chart of the Day

Starbucks reopening performance chart

The bigger picture — as is true for most companies, in and out of the restaurant business — is that while people still love and/or need coffee, the world around Starbucks has changed in many ways over the past few months. Consumer habits and expectations are different and trends have accelerated. And Starbucks must now react, without really knowing what the “new normal” will end up being.

For example, guidelines around social distancing and limited seating capacity — intended to slow the spread of Covid-19 — challenge the very concept of the neighborhood coffee shop.

And as a large percentage of the workforce continues to work from home — many indefinitely — the reduction in commuting means fewer people are spending time in commercial neighborhoods and transportation hubs, and more time in residential neighborhoods or the suburbs. All those commuters who were not listening to podcasts also aren’t visiting the Starbucks near the office.

These changes call for different store designs and concepts and a different geographic footprint. They also probably call for different products and services. But what? And for how long?

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Dan Frommer

Hi, I’m Dan Frommer and this is The New Consumer, a publication about how and why people spend their time and money.

I’m a longtime tech and business journalist, and I’m excited to focus my attention on how technology continues to profoundly change how things are created, experienced, bought, and sold. The New Consumer is supported entirely by your membership — join now to receive my reporting, analysis, and commentary directly in your inbox, via my twice-weekly, member-exclusive newsletter. Thanks in advance.

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