Due to monumental revenue in the 2024 financial year, Starbucks’ shutting down pick-up only stores comes as a shock for industry watchers. The coffee chain’s new CEO, Brian Niccol, shared this news during the company’s earnings call on July 19.
Starbucks’ shutting down pick-up only stores is coming roughly six years after the inception of the business model. According to Niccol, this development means about 90 pick-only stores have to go. This means they will either be decommissioned or converted to Starbucks community cafés by the 2026 fiscal year.
The top exec explained during the call that the motive behind the impending Starbucks mobile-only store closure is strategic. “We found this format to be overly transactional and lacking the warmth and human connection that defines our brand,” explained Niccol.
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The CEO also clarified that the pickup-only Starbucks phase-out does not translate to a total wipeout of the company’s digital capabilities. Indeed, Niccol is confident that despite Starbucks store closures in 2026, customers can still enjoy immersive digital experiences with the coffee maker.
The July earnings call was also an opportunity to announce a rechanneling of resources to make Starbucks community cafés more convenient. This development will see over 1,000 Starbucks outlets each getting $150,000 to uplift their lighting, seating and overall ambience. This revamp is the epicentre of a community-focused strategy, for which CEO Niccol has earmarked $500 million.
Invariably, this announcement marks the beginning of the end for the contactless coffee service of Starbucks. Interestingly, a budding Chinese competitor, Luckin, has keyed into that very strategy. Luckin is a young company offering cheap coffee and a largely app-centric service. Still, the American coffee giant remains unfazed by the Starbucks vs Luckin 2025 standoff. Brian Niccol suggests that the company’s current goal is prioritizing human connections over transactional experiences.
The American coffee giant has also allayed fears about the labor implications of Starbucks shutting down pick-up only stores. Though there is no public timeline for the closure of the pick-up only stores, Starbucks has reassured affected workers of redeployment to community cafés.
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Some Starbucks stores have experienced recurrent sales decline in the past six quarters. Nonetheless, the company remains optimistic as year-on-year revenue remains in the green. Also, shares saw a 3-5% uptick in value after the announcement of Starbucks shutting down pick-up only stores.
The most interesting part of the Brian Niccol Starbucks strategy is that the changes will not be merely infrastructural. Overall, the company is looking to polish up its dusty culture, as customers now see it. Menu simplification, staff reinvestment, and store layout redesign to boost dwell time are some of the issues Starbucks has promised to address. We can’t wait to see how it all turns out; shareholders are particularly looking forward to the strategy’s revenue-boosting potential.
Starbucks may be sacrificing speed, but it gains in warmth, experience, and long-term engagement.
