Starbucks Announces Plans To Shrink

In a May 21 letter to employees, Starbucks CEO Kevin Johnson stressed that humanity must embrace change in the face of adversity, citing the construction of the Transcontinental Railroad, the discovery of a polio vaccine, and the Space Race as examples of innovations that united our nation. So, too, must Starbucks step up during these unprecedented times, facing down the menace of COVID-19 by adding more drive-thrus and pickup-only stores over the next 18 months.

Starbucks has actually been planning this transition for a while, introducing its first 100% mobile order pickup concept in New York City's Penn Station late last year. In a statement posted yesterday on its website, the company followed up Johnson's May letter with an official announcement that it will now be accelerating its transformation timeline from 3-5 years down to 12-18 months. According to an SEC filing, 400 underperforming Starbucks locations in the U.S. and Canada will be shuttered and 300 new, more streamlined locations will be opened during this time.

According on Johnson, before the COVID-19 crisis, 80% of store transactions were to-go orders, which was the impetus behind the changes we'll all soon be seeing in Starbucks cafes. There were existing plans to close low-traffic locations, such as those found in shopping malls, and open new ones in areas that can combine indoor seating with drive-thru. In dense metro areas, more stores will be converted into pickup-only concepts like the one in Penn Station, with some locations closing entirely, and new ones opening in smaller retail footprints.