I stopped by one of Starbucks’ mobile-focused pickup-only locations in Seattle this week after the company announced that it was sunsetting the small-format stores.
My experience was quick, seamless, and convenient — and perhaps that’s the problem.
In a call with investors on Tuesday announcing the news, Starbucks CEO Brian Niccol described the pickup-only stores as “overly transactional and lacking the warmth and human connection that defines our brand.”
Niccol, the former Chipotle CEO who joined Starbucks last year, is leading an overhaul under a plan called “Back to Starbucks” in a bid to boost slumping sales. The Seattle coffee giant just reported its sixth-straight quarter of declining same-store sales.
Part of that strategy is to re-center stores as a place where customers spend more time — the “third place” concept championed by former longtime Starbucks CEO Howard Schultz.
Moving away from the tech-driven pickup stores is a notable shift for a company that once leaned heavily into its technology as a competitive advantage.
Starbucks was early to mobile ordering, launched its own digital wallet long before Apple Pay took off, and has one of the most popular loyalty apps in the food and beverage industry, with nearly 34 million active users.
Mobile orders represent nearly a third of total transactions at U.S. company-operated stores.
Niccol said he thinks Starbucks can thread the needle between convenience and coziness.
“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,” he said Tuesday.
Starbucks is still leaning into technology under Niccol’s leadership, including a new “Smart Queue” order sequencing algorithm built to help improve mobile ordering — which has been a sore spot for the company given how it creates congestion inside stores.
Niccol also said the company is working on what he calls the “coffeehouse of the future,” including a new prototype store design with 32 seats and a drive-thru, and a smaller version with 10 seats.
The CEO said he hopes the changes can help reestablish “that moment of connection between a barista and their customer, bringing back warm and welcoming coffeehouses with great seats, delivering drinks in four minutes or less in the cafe and drive-thru while bringing order to mobile order…”
The move away from mobile-focused stores comes as Starbucks’ techie rival Luckin — which operates cashierless, app-only stores — just opened its first U.S. locations in New York City after overtaking Starbucks in China.
I was in New York City in 2019 when Starbucks first debuted the mobile order and pick-up only concept. I had a pretty similar experience back then — convenient and fast.
During my quick stop at the pickup store in Seattle this week, I saw six or seven other people come through in a 5-minute span, at 5:45 p.m. on a Thursday evening. They walked in, grabbed their drink, and left — a grab-and-go, frictionless experience that Starbucks once imagined.
Now, though, that friction — seats in a store, a brief chat with a barista, your name on a cup — might be the feature, not the bug.
