Starbucks wants to be your 'third space' again — if you buy something

During the company’s annual shareholder meeting on March 12, CEO Brian Niccol outlined a plan to reclaim Starbucks (SBUX)’ place as a “third space” for customers.

“Imagine coffeehouses that are comfortable and warm with expanded seating options, power outlets, and abundant food displays,” Niccol said. He went on to describe stores with better design, separating mobile ordering from the cafe experience, as well as a redesigned espresso bar that “adds a sense of theater.” The company has already begun piloting new designs in select U.S. locations.

This revamp is part of Niccol’s broader “Back to Starbucks” strategy, aimed at returning the company to its glory days as a leader in coffee. While the new seating and power outlets are meant to draw customers in and keep them coming back, they’re also closely tied to Starbucks’ efforts to boost sales after four consecutive quarters of decline.

The “Big Fix” includes several changes, such as bringing back condiment bars and handwritten names on cups, though the latter has sparked some chaos. Additionally, Starbucks is promising faster service, with baristas brewing fresh coffee in under four minutes, a streamlined menu that’s 30% smaller (and includes new vegan-friendly options), and the removal of extra charges for dairy-free drinks. In early March, the coffee giant said it would remove 13 drinks from its menu to make room for better selling options.

Not all of Starbucks’ changes have been well-received. The company is restricting access to bathrooms, making them available only to paying customers. To support these changes, staff are undergoing extensive training, including new customer interaction protocols to ask whether customers plan to stay or go. In late January, the company reversed its 2018 goal of being the “third place” for people to gather, regardless of whether they were customers or not. Niccol stated that Starbucks would rather close locations than return to its previous stance.

Niccol also told shareholders that Starbucks now has more stores outside the U.S. than within it, offering significant growth potential globally. China, in particular, is a key focus due to its “dynamic market and opportunities.”

Niccol added that Starbucks can learn valuable lessons from its robust supply chain in China to improve operations in North America, and hinted at potential partnerships to drive further growth.

In early March, Niccol gave corporate employees tough love, urging them to work harder and take greater accountability for Starbucks’ financial health following the layoff of 1,100 workers.