Starbucks to Invest $1 Billion in North American Cafe Upgrades, FT Reports

Starbucks (NASDAQ:SBUX) is reportedly investing approximately $1 billion to renovate up to 9,000 of its company-operated cafes across North America. The initiative aims to create a more inviting atmosphere to encourage customers to stay longer and increase spending, according to a report from the Financial Times.

Reviving the 'Third Place'

The renovations, referred to as "uplifts," are designed to revive Starbucks' long-standing concept of being a "third place" for customers between home and work. This strategy bets that a more comfortable environment will translate into higher sales as patrons spend more time in stores.

According to the FT, which cited Dawn Clark, Starbucks’ senior vice-president of coffee house design and concepts, the changes will include:

• Adding chairs, rugs, and bookshelves
• Incorporating plants and softer furnishings

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The cost for these upgrades is estimated at about $150,000 per store.

Part of Broader Turnaround Plan

This capital investment is a key component of a turnaround plan led by Chief Executive Brian Niccol, following a challenging period for the company, the report stated. The company is moving quickly on the project, with about 1,500 stores expected to complete the upgrades by the end of September.

Alongside the store makeovers, Starbucks is also pursuing a significant cost-reduction program, targeting $2 billion in savings over the next two years. The report noted that these new upgrades can be completed overnight, making them a more cost-effective approach than previous, more extensive remodels.