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As takeout explodes, coffee chains start ditching seats

Caribou Coffee is introducing a new small-format location, while Starbucks is eyeing a pickup-only store.
Photograph courtesy of Caribou Coffee

Starbucks emerged in the 1990s with a unique idea: convince customers to stick around a while, rather than push them out the door. Former CEO Howard Schultz had a name for this: the “third place”—after work and home.

But as consumers increasingly take their food and drinks elsewhere, or order delivery, that idea is falling by the wayside. Coffee concepts, including Starbucks, are increasingly exploring seatless locations to serve the growing demand for convenience.

Earlier this week, Starbucks CEO Kevin Johnson told Bloomberg that the chain is developing a pickup-only store to open in Manhattan this fall, patterned after the chain’s Starbucks Now concept in China that is focused on the “express customer.”

In a statement, the company noted that the store is part of a reimagined third place concept, in which Starbucks is looking to “modernize the experience in Starbucks stores.”

“We have to reimagine,” Chief Operating Officer Roz Brewer said in March, according to a transcript on financial services site Sentieo. “So this means evolving our business around three attributes. First is convenience. Second, we have to think about comfort. And third, it’s about the connection. That’s what customers expect when they visit our stores.”

Meanwhile, Midwestern rival Caribou Coffee recently announced a new store concept it calls the Caribou Cabin, which ditches interior seating in favor of drive-thru lanes and walk-up windows.

The Minneapolis-based chain plans to open several of these in Minnesota in the coming months. The “cabin” element of the design is a play on the state’s north woods culture.

It’s not just the coffee chains, however. Burger giant McDonald’s, for instance, recently opened a McDonald’s to Go concept in London that has no interior seating and ditches cashiers altogether for touchscreen kiosks.

Indeed, the restaurant industry is increasingly shifting toward a takeout future. Restaurant chains of all types are shrinking dining areas and devoting more space toward pickup or drive-thrus. More of them are also playing with takeout and delivery stores, such as chicken sandwich chain Chick-fil-A.

Coffee chains are something of a microcosm of this trend, though in their case it might be even more important, because consumers are more likely to take coffee with them than they are to drink it inside a shop.

Chains are getting more business through their drive-thru lanes, for instance—to the point where Dunkin’ and Starbucks are focused on building restaurants with those windows. A Dunkin’ with a drive-thru generates 30% more sales than one without. And the majority of customers at such stores order through that lane rather than inside.

At the same time, there are a rapidly growing number of drive-thru-only concepts. And these concepts have demonstrated what’s possible by focusing only on the convenience customer.

The Oregon-based drive-thru concept Dutch Bros. Coffee, for instance, generated nearly $500 million in U.S. system sales on just 328 locations last year, according to data from Restaurant Business sister company Technomic.

By comparison, the more traditional Caribou generated less than $300 million last year, even though it operated nearly 400 locations, according to Technomic.

Delivery, meanwhile, is becoming an increasingly important component in the coffee world. Starbucks, for instance, has been rapidly expanding delivery in the U.S. and plans to take it nationwide next year.

“We know that convenience is an important need state for customers generally, and we found that for Starbucks specifically, that convenience is very highly valued,” CFO Patrick Grismer told investors this week, according to a Sentieo transcript.

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