Since he took over as CEO of Starbucks last year, Brian Niccol has unleashed a torrent of changes, many of them designed to return the company to its “third place” coffee-shop roots. Baristas are now writing names on cups. The company has a code of conduct. Customers get free coffee refills. Starbucks is cutting from the menu. It’s marketing all of it.
Yet as the chain works to bring Starbucks more fully back to those roots, it needs to look at the shops themselves.
Speaking at the company’s annual shareholder meeting on Wednesday, Niccol said Starbucks has started testing new designs of its coffee shops. And then he offered some pretty big hints as to what those shops might look like.
“Imagine coffeehouses that are comfortable and warm with expanded seating, power outlets and food displays,” he said. “Stores with separation between the café and mobile orders, featuring risers and dedicated pickup shelves at locations to create an intuitive handoff and anchored by a redesigned espresso bar that adds a sense of theater and enhances the connection between our baristas and customers.”
Details on the “coffeehouse of the future” aren’t yet available. But it’s a logical next step for a company working to balance the needs of its on-the-go customers who use mobile order on their way to work with those who want to stay a while. The company is looking to establish standards for shops that ensure each of them have a more welcoming, coffeeshop feel.
Niccol arrived to Starbucks with a clear sense of what ails the chain, that as it has worked to court more and more mobile and drive-thru customers, it has lost its sense of purpose and what originally led consumers to the chain—that coffee shop feel.
To be sure, Starbucks’ focus on mobile ordering and loyalty members helped the chain become an immense success. Average unit volumes in the U.S. grew by 35% between 2018 and 2023, before its sales dropped. Total system sales grew more than 50%, according to data from Restaurant Business sister company Technomic.
Yet there is a sense that the company went too far. Starbucks built a lot more drive-thrus. It introduced pickup stores without seating. One of them replaced a higher-end Reserve location in downtown Seattle. More broadly, the conflict between the company’s demand for more digital and drive-thru customers and those who want to just have a coffee at a coffee shop contributed to the chain’s weak sales last year.
“We have made mistakes on this one,” Niccol said. “We have to go back and fix it.”
At the same time, Starbucks needs those on-the-go digital customers to keep its sales. It did not become the world’s second-largest restaurant chain purely by focusing on people who spend a couple of hours inside its coffee shops.
Niccol said that requires a balance. But he’s also confident in the company’s ability to do that. “We have the ability to do both,” he said.
Niccol said the company is focused on “delivering great experiences,” whether customers come in and sit down with a ceramic mug of coffee, or they order ahead and the sequence on mobile orders is correct “so people show up when their drink shows up and vice versa.”
“I believe we have the ability to do it,” Niccol added. “We have to bring order to how we do it and support our partners with the right process, standards, equipment to ensure it happens every single time.”
Niccol also got a bit philosophical. The restaurant industry after the pandemic has focused a lot on that digital and drive-thru customer. But restaurants are fundamentally gathering spaces, places for community.
“That third place is probably more necessary than it ever has been,” Niccol said. “Without a doubt, whether you are a teenager, 8-year-old person, somebody in their 50s or 40s, what everybody likes to do is connect with people in their community, in a safe place over a cup of coffee. Hot or cold, Starbucks can play a role.”
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