New York
CNN
—
Over the last few years, Starbucks pulled out 30,000 comfortable seats, installed hard wooden stools, blocked electrical outlets and turned stores into takeout counters for customers picking up orders off its mobile app.
The changes backfired and customers left for local coffee shops and other chains and brewed more coffee at home.
Now Starbucks is trying to win back customers looking to sit down for a cup of coffee by renovating 1,000 stores — 10% of its company-owned US locations—with comfy chairs, couches, tables and power outlets in the next year. The company aims to make changes to all of its US stores within the next three years for an undisclosed price tag.
“It’s creating comfortable seating where people want to come in. It’s not just the quick grab and go concept,” Mike Grams, Starbucks’ chief operating officer, said in an interview with CNN last week at one of the first remodeled stores in Bridgehampton, New York. “Maybe over past years, we lost our way a little bit on that.”
The company is beginning its remodel push in the Hamptons, the posh vacation retreat where Bon Jovi, Jennifer Lopez, Alec Baldwin and other celebrities own homes. Starbucks redesigned four stores in the Hamptons and plans to remodel New York City locations next quarter.
Starbucks’ “coffeehouse of the future” is not revolutionary, but the Bridgehampton renovation made the store feel modern. The design was minimalist, with a mix of light and dark-brown wood tones, dark-green walls and soft lighting. Plants and bowls of coffee beans were placed around the store. The espresso bar was opened up, and the menu board went digital.
At the Bridgehampton store, people were having conversations in low, cushioned armchairs, orange booth seats and high-top tables for two. Other customers were sitting in wood chairs on their laptops at small tables.
The big question is whether these changes go far enough to reverse Starbucks’ slide.
Sales at stores open at least a year have declined for five consecutive quarters. The company is getting squeezed by independent coffee shops, growing chains like Blank Street Coffee and Blue Bottle Coffee and drive-thru companies such as Dutch Bros. Customers have also balked at Starbucks’ prices.
“Is it an overwhelming change? No. But I think it makes a psychological difference,” said Joseph Pine, the co-founder of consultancy Strategic Horizons, who criticized Starbucks for “commoditizing itself” through mobile orders in a Harvard Business Review article last year. “It sends a signal to sit down and spend some time here,” he said.
But the redesigned store still didn’t solve the balance between mobile and in-person customers.
Despite a riser and a dedicated pickup shelf for mobile orders, customers piled up near the counter, waiting for their pickups and hovering near customers sitting down with their coffee.
Starbucks said it’s soon implementing technology that more efficiently sequences orders and a new staffing model that will help alleviate congestion at the counters.
The appeal to customers to sit down in stores again is part of CEO Brian Niccol’s “Back to Starbucks” strategy.
Since arriving from Chipotle last year, Niccol, the Mr. Fix-It of the fast food industry known for leading turnarounds at Taco Bell and Chipotle, has brought back a Starbucks tradition of baristas doodling on cups in Sharpie pens; reinstated self-serve milk and sugar stations; cut 30% of the menu; and ended its open-bathroom policy.
Starbucks is also offering free refills for customers who sit down in stores, served in ceramic mugs.
“‘Back to Starbucks’ is bringing Starbucks back to the brand that we all grew up with,” said Grams, who was the president of Taco Bell and took over as Starbucks’ COO in February. “It’s just making sure that you keep everything balanced and you create that sense of real comfort in our cafes.”
The new leadership team is trying to position Starbucks’ coffee shops as a “third place” again.
Starbucks’ longtime leader Howard Schultz envisioned the company’s stores as a location where people could relax that wasn’t their workplace or their home, designing stores for people to spend hours in plush purple armchairs, socializing and connecting.
The third place idea became part of Starbucks’ corporate mythology. But Starbucks struggled to maintain this identity as it built drive-thru stores and catered to the rise of mobile orders, which now make up more than a third of Starbucks’ sales.
Starbucks tried to serve customers looking for both a local coffee shop vibe and those who prioritized speed at the same time. The company ended up alienating both, said RJ Hottovy, an analyst who covers the restaurant industry at data analytics firm Placer.ai.
“People want more third place options out there,” Hottovy said. “To go after that and bring that feeling back for Starbucks is important.”
Starbucks is trying to return to its past, but stores won’t look like they did 20 years ago.
For example, Starbucks is not bringing back the iconic stuffed purple armchairs from the 1990s and 2000s. Starbucks said the fabric was easily worn and hard to keep clean. It retired the purple armchairs in 2008.
“You will see something similar to it returning to our stores,” said Meredith Sandland, a former Taco Bell executive who became Starbucks’ chief coffeehouse development officer in February. “Will it be purple? I don’t know. I’ll tease that one out.”
Each redesign will look slightly different, she said, but they will all include new lighting, colors, better acoustics and other improvements across more than 10,000 company-owned US locations. Starbucks also has around 7,000 licensed stores in the United States.
Starbucks also plans a variety of different seats in stores to encourage people to come in for different purposes – working solo on a laptop, having a meeting or reading a book, she said.
The goal is to make Starbucks feel more like a boutique setting, not a McDonald’s.
“I think of a ‘third place’ as a place that should be warm and welcoming (and) feel a little bit more like a hotel lobby than maybe a fast food restaurant,” she said.
