Starbucks is leaving America's dying malls and focusing on drive-thrus
- Some Starbucks employees report their mall stores are closing.
- Last year Starbucks said it was updating its strategy to focus on drive-thru and pick-up store formats.
- Starbucks says it will still have some stores in malls.
The suburbs are making a comeback, but malls are getting left behind as Starbucks wants out, too.
Three Starbucks employees in three states, whose employment was confirmed by Insider, shared that their mall-based stores closed in the last month. They all requested anonymity for fear of retaliation.
One barista in a Texas mall said he was "blindsided" at the news of the closure. All the baristas Insider spoke to were offered transfers to other locations.
Closing mall kiosks is part of Starbucks' strategy of investing more in drive-thru and pickup locations. Last summer, Starbucks announced it would close 400 US stores to "strategically optimize" its portfolio, with the greatest changes in urban markets.
"Starbucks continues to make meaningful progress to reposition our US store portfolio through this trade area transformation, which is now nearly 80% complete. In the past 12 months, we have opened 554 new stores combined with in-store seating and drive-thru service, repositioning our store portfolio to create a blend of traditional Starbucks stores with convenience-led formats," a Starbucks spokesperson told Insider.
Fast food and fast-casual brands across the country have optimized drive-thrus over the last year as they became crucial in the age of COVID-19. Drive-thru orders have grown across the fast-food industry since the pandemic closed many dining rooms. On-the-go orders, meaning drive-thru and pickup orders, made up 80% of Starbucks orders prior to the pandemic, Starbucks told Insider, and increased more than 10% over pre-pandemic levels in the first quarter of 2021.
Starbucks has invested in new technology and formats as drive-thrus become even more critical to the brand. The coffee chain has started adding double drive-thru lanes, along with implementing video ordering capabilities and handheld tablets for baristas to take orders. These developments can all decrease wait times and make drive-thrus more efficient by reducing bottlenecks, Kalinowski Equity Research founder Mark Kalinowski previously told Insider.
The coronavirus pandemic sped up the shift to pick-up and to-go locations, Starbucks CEO Kevin Johnson said in an earnings call in 2020.
Despite the shift in strategy, Starbucks says "high-traffic areas like malls, airports, campuses, and our other licensed locations will remain a key pillar of the Starbucks experience." This reiterates the chain's earlier statement last year, saying "Our vision is that each large city in the US will ultimately have a mix of traditional Starbucks cafés and Starbucks Pickup locations."
Starbucks decision to focus on drive-thrus and other formats over some malls makes sense. The retail apocalypse has made headlines for years, as some malls die a slow death and retail vacancy rates hit new highs. More than 12,000 stores closed in 2020, many of them crucial anchor stores that once kept malls afloat. The list of 2021 closures is still growing.
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