Pickup stores, in particular, will target dense markets facing some of the harshest COVID-19 restrictions, like New York City, Chicago, Seattle, and San Francisco. But even when the virus clears, Starbucks believes convenience and the preference for digital-enabled transactions will stick. Before COVID-19, roughly 80 percent of Starbucks’ U.S. transactions were on-the-go.
In addition to designing stores that follow that shift, Starbucks’ transformation includes renovating layouts to add separate counters for mobile orders at high-volume stores, which enable customers and delivery couriers to grab-and-go orders without the bottleneck.
Pickup venues, which Starbucks said will number in the “hundreds” within five years, plan to drop into trade areas as additional accessibility points, not so much replacement hubs. The company pictures traditional cafes, complete with the “third-place” promise, supported by a Pickup store within walking distance that can reduce crowds and provide a more convenient format for those guests who don’t want to grab a seat.
While this unfolds, and curbside tracks toward 2,000 locations by the end of next year, the brand will lean into drive-thru development in suburban and semi-rural locations. The goal being to extend the reach of the Starbucks brand with high volume, high-margin stores, providing customers the convenience they’re seeking, CEO Kevin Johnson said.
And, at the end of the day, a versatile roadmap to 55,000 locations. Starbucks said its global store portfolio is expected to grow by about 6 percent on a net basis annually starting in fiscal 2022. The U.S. plans to deliver net new store growth of 3 percent.
The plan for America includes some permanent COVID-19 shifts. About 45 percent of stores will offer drive thru moving forward from a current level of 35 percent, the company said. Some could feature double lanes or walk-the-line order takers with tablets, as outlined previously. In Q4, about 75 percent of Starbucks’ U.S. sales volume flowed through drive thru as well as mobile orders. That figure was 97 percent in April’s final week and 60 percent or so pre-crisis.
Getting to Starbucks’ final 55,000-store target would represent growth of more than 66 percent in the next decade, which would have sounded a tall order in April when Starbucks reported some of the deepest COVID-19 drops of any quick-service leader. At that point, pandemic conditions had cost the company $915 million. COVID-19 resulted in roughly $3.1 billion lost—relative to pre-pandemic expectations—by July. Starbucks’ Q2 same-store sales declined 3 percent in the U.S.—the first negative number since 2009—as 50 percent of corporate units and 46 percent licensed temporarily closed. Comps plunged 40 percent globally in Q3 and traffic sliced in half. Revenue declined 38.4 percent to $4.2 billion.
But then cafes started to get back on line, with additional points of purchase, like curbside, and trends improved.
Starbucks boosted U.S. same-store sales from negative 40 percent in Q3 to negative 11 percent in August. They declined just 9 percent in Q4, a vast jump from the COVID-19 depth figure of negative 65 percent.