Starbucks remains one of the most important brands in American retail. It has scale, loyalty, brand awareness, real estate history, beverage innovation, and one of the strongest consumer platforms in the world. In many ways, Starbucks is still best-in-class. That is exactly why the next chapter matters so much.
Much of the conversation around Starbucks today focuses on store closures, mobile ordering, drive-thru strategy, labor, store refreshes, and whether the company can bring back more of the “third place” experience. All of those issues matter.
But from the perspective of an operator, developer, and landlord, I believe there is a bigger point: Starbucks should not become less aggressive in development. It should become more aggressive in the right development.
If I were an activist investor or a board member looking at the company, I would not tell management to simply shrink, slow down, or become defensive. I would encourage the opposite: accelerate smart growth in the right trade areas, with the right formats, and with better alignment among corporate strategy, local real estate teams, developers, and landlords. The brand is still powerful, but the market around it has changed.
The Coffee Category Has Become More Competitive
For many years, Starbucks defined the premium coffee category in the United States. If a developer could land Starbucks, it gave a center credibility. If Starbucks entered a trade area, competitors followed. The brand was not only a tenant; it was a traffic generator.
That remains true in many locations. But the category is now more competitive than ever. Today, every operator wants a piece of the beverage occasion. Drive-thru coffee chains, local specialty shops, boba concepts, smoothie brands, energy drink platforms, convenience stores, fast-food chains, and international coffee brands are all competing for the same morning and afternoon customer.
The pie is only so big. It can be sliced in more ways, but not every trade area can support unlimited coffee and beverage trips. I saw this firsthand in the brands we operated. When a category becomes attractive, everyone wants to enter it. At first, that creates energy. Over time, it creates pressure. The brands that win are the ones that combine product, speed, value, convenience, real estate, and guest experience better than the rest of the field.
That is what makes Starbucks’ next chapter more complex. The turnaround is not only about improving operations inside the four walls. It is about competing for frequency in a category where consumers have more choices than ever before.
The Consumer Is More Price-Sensitive
Coffee may be an affordable luxury, but even affordable luxuries have limits. For many consumers, a $6 or $7 latte is not an automatic daily purchase. In an inflationary environment, households are making more deliberate choices. Quick-service restaurants, fast-casual brands, and beverage chains are all dealing with higher labor, food, construction, and occupancy costs, as well as customers who are more focused on value.
Value does not always mean being the cheapest. Value means the customer feels the experience, speed, quality, convenience, and price all make sense together. If that balance is off, even loyal customers can reduce frequency. They may still love Starbucks, but instead of going five times a week, they may go three. Instead of buying for the office, they buy only for themselves. Instead of adding food or a premium beverage, they trade down. At Starbucks’ scale, small changes in frequency matter.
The Experience Still Matters
One of Starbucks’ biggest historical strengths was not just coffee. It was the venue. In many secondary and smaller markets, Starbucks became the place to meet. It was where people held informal business meetings, met friends, worked between appointments, studied, or stopped during the day because it felt familiar, clean, comfortable, and welcoming to everyone. That still matters.
The industry has become increasingly focused on drive-thru, mobile order, speed, and convenience. Those are important. But Starbucks should not lose sight of the fact that many customers still want a real place to sit, meet, and spend time. Especially in smaller and secondary markets, there are often fewer quality gathering places. That is where Starbucks historically shined.
This is also where real estate selection becomes critical. A smaller-format drive-thru may work in some trade areas. But in other markets, the right cafe with seating, visibility, parking, access, and strong co-tenancy can become a daily community anchor.
Starbucks has always been able to be both convenient and experiential. The next phase should not force every store into one model. The best opportunity may be a more flexible approach: drive-thru where speed matters most, smaller boxes where economics require it, and stronger cafe experiences in markets where Starbucks can still be the preferred meeting place. In smaller markets, seating is not old thinking. It can be the strategy.
Food Innovation Can Unlock More Dayparts
Another major opportunity is food. Starbucks has built tremendous beverage innovation, especially in cold drinks, refreshers, seasonal beverages, and customization. But the company should not rely solely on beverage innovation to drive growth.
There is a bigger opportunity to improve food quality, variety, and pairing. Yes, food generally carries lower margins than beverages. But the goal is not only margin percentage. The goal is total check size, customer frequency, and better daypart utilization.
A customer who comes in for coffee may add a breakfast sandwich, pastry, protein box, salad, or afternoon snack if the offering is compelling. A customer who might otherwise skip Starbucks for lunch may come in if there is a better pairing between beverage and food. A cold drink plus the right food item can create a higher ticket and a more complete occasion.
That is especially important as the brand competes across more dayparts. Morning coffee is still the core. But mid-morning, lunch, afternoon snack, after-school, and early evening all represent opportunities. Starbucks has the real estate and customer traffic to capture more of those occasions.
The question is whether the food program can become strong enough to support that behavior. Food does not need to turn Starbucks into a restaurant. It needs to make Starbucks a better daily habit.
Better food innovation, better pairing, and more localized daypart thinking could help Starbucks increase average check size while giving customers more reasons to visit beyond their usual beverage order. The answer should not be to rely only on cold drinks. The answer should be to create better occasions.
Development Should Be a Bigger Part of the Answer
In my view, one of Starbucks’ biggest opportunities is to make development a more aggressive part of the turnaround. That does not mean opening stores just to chase unit count. It means being more strategic, more local, and more flexible.
The best opportunities may be in high-growth suburbs, secondary markets, strong grocery-anchored centers, industrial corridors, commuter routes, college towns, and trade areas where Starbucks can still be the preferred daily coffee destination.
In many of these markets, developers, communities, and consumers want Starbucks. But execution matters. A great drive-thru Starbucks in the right location can still be one of the strongest retail tenants. But a drive-thru is not successful just because the brand is Starbucks. The site still needs visibility, access, stacking, traffic flow, morning-side convenience, parking, and the right surrounding co-tenancy.
The company has an opportunity to be more aggressive and more selective. Those two ideas are not opposites. The best retailers know how to do both.
Store Closures Have Impacted Developer Trust
One area Starbucks should address directly is the impact of recent store closures and shifting real estate decisions on the development community. Starbucks has historically been one of the most sought-after tenants in retail development. In many projects, having Starbucks created instant credibility, helped validate the site, and strengthened overall merchandising. Developers wanted Starbucks, lenders respected Starbucks, and communities often welcomed Starbucks.
That remains true in many locations. But the last few years have shifted the conversation. Store closures, changing formats, delayed decisions, and more restrictive lease terms have affected developers – from large institutional owners to smaller local developers who worked hard to bring Starbucks into their projects.
When a developer invests time, capital, entitlement work, design, tenant coordination, and community support around a tenant, a closure or sudden strategic shift can have real consequences.
That does not mean Starbucks is no longer a premier brand. It is. But it does mean Starbucks may no longer be the automatic first choice in every situation as it once was. That trust can be rebuilt, but it has to be intentional.
Starbucks should work closely with preferred developers, local landlords, and real estate partners to rebuild confidence. The company should want developers to embrace the brand again, not just accept it because of its credit.
The best developers are not only looking for a tenant that can pay rent. They are looking for a tenant that is committed, collaborative, flexible, and additive to the entire center. Restrictive lease language is part of that discussion.
Coffee, breakfast, beverage, and overlapping menu restrictions may protect a tenant on paper, but if they are too broad, they can harm the overall project. A restriction that blocks a complementary use can reduce traffic, limit customer diversity, and weaken the center’s merchandising. In the right retail environment, synergy matters. More quality operators can drive more visits, not fewer.
This is especially important in smaller and secondary markets, where one good tenant can help another. Consumers want options. They want convenience. They want active centers with reasons to visit throughout the day. For Starbucks, the opportunity is to reverse any damage from recent closures and restrictive deal structures by becoming more collaborative with the development community.
That means listening to local market feedback, involving real estate teams earlier, being more practical with use restrictions, and recognizing that developers are long-term partners in the brand’s growth. If Starbucks wants to accelerate smart development, it needs developers to lean in again. That requires trust.
Global Competition May Raise the Stakes
Another factor is global competition. Several international coffee and beverage brands are studying the U.S. market, and some have already started testing or expanding here. Many of these brands were built around smaller footprints, mobile ordering, value, speed, and high-frequency customer behavior.
Some may succeed. Some may not. But the broader point is clear: Starbucks is no longer competing only against traditional American coffee brands. It is competing against new models with different economics, different real estate strategies, and different customer acquisition tactics.
That is another reason Starbucks should not be too defensive. The company has the brand, scale, data, customer base, and real estate knowledge to win. But it needs to keep moving.
The Brand Is Not Broken. The Opportunity Is Bigger Than That.
I do not believe Starbucks is a broken brand. Far from it. Starbucks remains one of the strongest retail brands in the world. It still has tremendous customer loyalty, a powerful app, strong beverage innovation, global purchasing power, and an unmatched history of choosing great real estate.
But the market it is trying to grow in is more competitive than the one it once dominated. That is why the turnaround may take time. It requires more than marketing. It requires store-level execution, faster execution, better value perception, stronger food innovation, improved daypart strategy, labor alignment, smarter formats, disciplined real estate, and renewed trust with the development community.
For landlords and developers, Starbucks should still be viewed as a premier tenant. But every site must be underwritten carefully. The best locations will likely remain very strong. The wrong location, access, format, or overly restrictive deal structure may not perform as Starbucks locations have historically.
For Starbucks, the opportunity is clear: Be bold again, but be locally informed. Listen to consumers. Listen to store teams. Listen to local real estate professionals. Listen to developers who understand trade-area behavior at the ground level.
Starbucks became great because it understood both brand and place. It created a beverage habit, but it also created a meeting place. The next chapter will depend on how well it reconnects those strengths – better locations, better experiences, better food pairings, and a more aggressive yet more locally informed development strategy.