Starbucks pilots ‘coffee house of the future,’ to phase out pickup-only stores
Starbucks Corp. is investing in improving its brick-and-mortar experience as part of its turnaround strategy under CEO Brian Niccol.
The coffee giant plans to sunset its mobile order and pickup only concept in fiscal 2026, Niccol told analysts Tuesday on the company’s earnings call. The format was launched in New York City in 2019. It has since grown to approximately 90 locations nationwide.
“We found this format to be overly transactional and lacking the warmth and human connection that defines our brand,” Niccol said. “We have a strong digital offering and believe we can deliver the same level of convenience through our community coffee houses with a superior mobile order and pay experience. “
Niccol, who took the reins of Starbucks in September, has focused on restoring the company’s signature “third place” vibe. He told analysts on the call that every coffee house the company operates “should be warm and welcoming and provide a place for customers to connect and gather.”
“They should have a great seat for any occasion and they should provide customers access to a high quality mobile order and pay experience and a drive through where possible,” he added.
Starbucks has been working on the “coffee house of the future,” Niccol told analysts, and has a new standalone prototype that will open next year. It boasts 32 seats, a drive thru and costs roughly 30% less to build. A small format version of the prototype with approximately 10 seats will open in New York City in the next few months.
“We believe this new prototype will deliver an exceptional customer experience, improve unit economics and unlock growth opportunities in more markets,” Niccol said on the call.
Store "Uplift" Program
Starbucks slowed new builds and major renovations to prioritize a new coffee house “uplift” program, with a target investment of approximately $150,000 per store and minimal to no downtime. The uplifts are intended to quickly replace thousands of seats the chain removed and introduce greater texture, warmth and layered design, Niccol said.
The program, accelerating now in New York City, will be expanded to Southern California later in the fourth quarter. By the end of calendar year 2026, Starbucks will have completed at least 1,000 uplifts across North America, according to Niccol.
Third Quarter
Starbucks efforts to improve its customer experience come as the company continues to struggle. For its third quarter, ended June 29, global same-store sales fell 2%, marking the sixth straight quarterly decline. North American same-store sales also were down 2%, driven by a 3% decline in comparable transactions, partially offset by a 1% increase in average ticket.
Consolidated net revenue rose 3.8% to $9.46 billion, topping estimates of $9.31 billion.
Net income totaled $558.3 million, or $0.49 per share, down from $1.05 billion, or $0.93 per share, in the year-ago quarter. A discrete tax item and a one-time investment hosting the company’s three-day event for U.S. store managers weighed on Starbucks’ earnings per share by $0.11. Adjusted earnings were $0.50 per share.
“We've fixed a lot and done the hard work on the hard things to build a strong operating foundation, and based on my experience of turnarounds, we are ahead of schedule,” Niccol stated in the earnings release. “In 2026, we'll unleash a wave of innovation that fuels growth, elevates customer service, and ensures everyone experiences the very best of Starbucks."
Niccol was upbeat on the earnings call, saying that company has made meaningful progress and is ahead of its expectations with regard to its turnaround strategy.
"While our financial results don’t yet reflect all the progress we’ve made, the signs are clear — we’re gaining momentum,” Niccol said.
Starbucks opened 308 net new stores during its third quarter, ending the period with 41,097 stores ( 53% company-operated and 47% licensed). Stores in the U.S. and China comprised 61% of the company’s global portfolio, with 17,230 and 7,828 stores in the U.S. and China, respectively.
