Starbucks (SBUX) CEO Brian Niccol said the corporate is putting a welcoming experience and safety first because it reverses its open-door policy.
Earlier this month, the 54-year-old company shared plans to implement a Coffeehouse Code of Conduct where only paying customers can sit in-store or use the restroom — a reversal from its practice of letting anyone within the door. Niccol said the change was made resulting from feedback from customers and employees.
“To be able to be the coffeehouse that we would like to be, we want to bring some practical pieces to our Code of Conduct,” Niccol told Yahoo Finance. “Our first priority is our paying customers … that just makes numerous sense.”
When asked if more security could be needed to implement the change, he said, “If we do must have additional security, we’ll do it,” adding that the “No. 1 priority” is for workers to feel supported as they serve customers.
“They should know that they are protected, and so they must know that we will be right there with them,” he said, noting that if there are cases where the economics don’t work, “we’ll close the shop.”
Making a premium store experience might be a key a part of differentiation as drive-through coffee chains like Dutch Bros (BROS), Scooters, and seven Brew proceed to expand.
“I actually do consider the mix of our partners, the standard of our coffee, the craftsmanship that we offer, after which the third-place experience that we will deliver, no one else does it like us,” Niccol said.
Starbucks has the potential to double its footprint within the US, projected Niccol. The corporate currently has over 17,000 locations and opened 113 stores in North America in its most up-to-date quarter.
Nevertheless it’s not all excellent news.
“Unfortunately, there will probably be some stores that can have to shut along the way in which in order that we set ourselves up for achievement going forward,” he said. He identified markets like Texas and the southeast as under-penetrated for Starbucks.
In a note, William Blair’s Sharon Zackfia wrote that she expects restaurant development “to slow at an unspecified rate in fiscal 2025,” in comparison with a 6% systemwide growth in fiscal 2024. The corporate must “accommodate upcoming redesigns and renovations while unlocking capital for broader turnaround efforts.”
She added that recent US locations are inclined to outperform, contributing to “nearly 90% incremental sales inside trade areas.”
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.