Starbucks Cafe Of The Future Central To Second Coming Of Third Space

Starbucks has begun work on the coffeehouse of the future, with a new drive-thru standalone prototype that will include 32 seats and will open in fiscal 2026 as the company reimagines its outlets.

It will be nearly a third lower in cost to build, the company said, with debut concepts already in The Hamptons, while a small format version with approximately 10 seats is being built in New York City and will open in the next few months.

The reimagining of the cafés as more than just places to grab a latte is a major departure from the tech-driven focus many retailers – including Starbucks – have adopted and Starbucks CEO Brian Niccol stressed on the company’s recent earnings call that he is prioritizing making over its cafes.

He aims to create physically welcoming spaces that bring back familiar interio touches and double down on the ‘third space’ concept that catapulted the coffee giant into a global powerhouse.

Those touches will include more generous seating and designs reflecting the local communities in which they are located, in what is an ongoing shift away from the cookie-cutter approach that has seen Starbucks lose some of its shine.

Some stores in New York City and southern California have already been given the makeover and by the end of next year some 1,000 coffeehouses will have been refreshed in the initial tranche.

Starbucks Shifts Back to Physical

The move also reflects a shift away from the heavy focus on the digital experience, which has led to criticisms over its impact on the in-store experience. Niccol has focused on restoring the company’s famous third place ethos since he took the helm on a mega salary in September 2024.

Niccol said that Starbucks has slowed new builds and major renovations in order to prioritize its new uplift program, with an average $150,000 investment per store.

“Every coffeehouse we operate 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-thru where possible. The uplifts are intended to quickly replace thousands of seats we removed and introduce greater texture, warmth and layered design,” Niccol said.

“We believe this new prototype will deliver an exceptional customer experience, improve unit economics and unlock growth opportunities in more markets,” Niccol said of the changes.

Some of the changes will vary based on store size and location but all will be planned to help create community and make customers feel “warm, comfortable and cared for”, the company said, adding that in new format outlets customers are staying longer, visiting more often and sharing positive feedback.

Starbucks Faces Increased Competition

The shift comes as Starbucks navigates a competitive market where app-based ordering, delivery, and loyalty programs dominate. While the company’s mobile app remains a cornerstone of its business, executives have stressed that the future lies in reinvigorating the café experience itself. New store formats are at the heart of this.

In other changes, Starbucks plans to wind down its mobile order-and-pickup-only concept in fiscal 2026. Niccol said he believed that this format is overly transactional and lacked the “warmth and human connection” that defines the Starbucks brand.

By focusing on physical stores, Starbucks is making a strategic gamble. Online sales and delivery surged during the pandemic, but consumer trends are shifting again. Data shows that many customers are seeking out social spaces and Starbucks sees an opportunity to reclaim its role as a gathering and hang out spot.

Beyond the U.S., in the Middle East, Starbucks is partnering with Alshaya Group to open approximately 500 new stores over the next five years, opened its first Icelandic outlet recently, and is selling a stake in its Chinese operation with bids thought to value the business at around $5 billion.

Starbucks is also facing more domestic competition, with several new beverage players entering the market from Asia in recent months.