On Thursday, the coffee giant unveiled a $1 billion restructuring plan that will shutter more than 100 North American cafés, cut 900 non-retail jobs, and remodel over 1,000 locations.
The reset, CEO Brian Niccol said, is about restoring warmth and comfort—an effort to re-create the “third place” he has championed since taking the helm last year, the hangout between home and work that first made Starbucks a global brand in the 1990s.
At the same time, Starbucks appears to be losing ground with Gen Z, something it tacitly admitted in its latest earnings, when it moved to shutter mobile-only “pickup” stores built for speed and “frictionless” transactions that it assumed would be catnip for a digital-native generation. Its market share among the cohort has slipped from 67% to 61% over the past two years, marking four consecutive quarters of declines, according to Consumer Edge.Starbucks denies that they’ve lost traction with Gen-Z: during their recent quarterly earnings call, Niccol noted that their customer value perceptions are at near two-year highs, driven by gains among Gen Z and milennials who “make up half our customer base.”
However, arguably, like many restaurant chains, Starbucks misread the generation. Seeing their social awkwardness and preference for digital ordering, the company wrongly assumed it should structure its stores around those behaviors. But Niccol told analysts in July that the mobile-only format was “overly transactional and lacking the warmth and human connection that defines our brand.”
