Starbucks co-founder and Executive Chairman Howard Schultz says he expects the coffee chain's cost of occupancy will decline in coming years as landlords reduce rents at its physical shops.
National debut Starbucks opened its first Reserve shop, a new format dedicated to its premium Reserve brand, in Seattle. The Reserve units are a scaled-down version of Starbucks' immersive Reserve Roasteries, which aim to bring to life the theater of coffee roasting, brewing and packaging for customers
In a memo to employees, Schultz predicted that rents would begin to fall as the advantage in lease negotiations shifts to tenants. “This is good news for Starbucks and the future of our unit economics,” Schultz said in the memo. “This is not going to be a cyclical change in our occupancy expenses, but a permanent lowering of the cost of our real estate.”
Starbucks has a lot of store openings planned, according to Reuters. The company has been opening roughly 700 traditional U.S. units per year.
And as Starbucks gears up to compete against more-upscale rivals, it has begun rolling out a higher-end concept.
Best of the best “Our Reserve store takes the best of coffee craft as well as artisan baking and layers in a marketplace-style customer experience, creating a space that has both energy and moments of intimacy,” said Liz Muller, Starbucks' senior vice president of creative, global design and innovation
Starbucks opened its first upscale Reserve store in Seattle this week. Reserve stores serve alcoholic beverages and high-end baked goods from Italian bakery Princi. It has long-term plans to open as many as 30 Reserve Roastery emporiums, 1,000 Reserve stores and three stand-alone Princi bakeries, in Seattle, Chicago and New York City.
Premium vibe Located at Starbucks' Seattle headquarters and open to the public, the new premium Reserve retail format features a marketplace-style environment
By Brannon Boswell
Executive Editor, Commerce + Communities Today
