Starbucks continues nostalgia Gen Z, betting $ 1 billion in terms of “third place”

Thursday, the coffee giant unveiled a restructuring plan of $ 1 billion which will make more than 100 North American coffees closed, will reduce 900 jobs at no cost and renovate more than 1,000 locations.

Reset, said CEO Brian Niccol, concerns the restoration of heat and comfort – an effort to recreate the “third place” that he defended since his care last year, the meeting place between the house and the work that made Starbucks a world brand in the 1990s.

At the same time, Starbucks seems to be losing ground with Gen Z, something he tacitly admitted in his latest gains, when he went to the “collection” stores only designed for speed and transactions “without friction” which it supposed to be catnip for a native digital generation. According to Consumer Edge, its market share among the cohort has increased from 67% to 61% in the past two years, marking four consecutive quarters of declins.

Starbucks denies that they have lost traction with Gen-Z: during their recent quarterly call, Niccol noted that their client value perceptions are at peaks of almost two years, pulled by gains among the Met Z and the Mintenials which “compose half of our customers”.

However, undoubtedly, like many restaurant channels, Starbucks has not read the generation. Seeing their social clumsiness and their preference for the digital order, the company has wrongly assumed that it should structure its stores around these behaviors. But Niccol told analysts in July that the mobile format only was “too transactional and lacking in heat and human connection that defines our brand”.

But Gen Z, Niccol bets, aspires that the old Starbucks feeling in the same way that he rushes for a “Kid from the 90s” summer.

Nicknamed by some as the most lonely generation, they are rather gravitant towards eccentric and local cafes which serve as cultural community and signifier centers – the genre you would see on emissions like Friends Or How I Met Your Mother, The data from the EDGE Consumer show.

Niccol thinks that the answer is in the original innovation of Starbucks of “third place”.

Bring this feeling of central perk

The idea of ​​”third place” comes from the 1989 book of urban sociologist Ray Oldenburg The big good placeWho argued that the company needs to bring together places beyond the house and work. Cafes, pubs, gymnasiums, manicure show – all the number.

Starbucks worked hard to embody this term; His CEO at the time of Oldenburg’s book was published for the first time, Howard Schultz, used it so often in radio shows and in interviews that people supposed that he had invented it.

“Starbucks was remarkable for spacious and comfortable seats at the start,” said Karen Christensen, author and collaborator of Oldenburg, at Coffee Newsletter The casting. “It was the usual place to find a seat and Wi-Fi and electricity in a strange city, and a common place to meet friends.”

However, this atmosphere has been more difficult to find in recent years. The steering wheel and mobile pick-up are now more numerous than long seated visits, and six consecutive quarters of the drop in sales at comparable stores suggest that customers do not stay. Niccol said in his note that the goal is now to bring people back.

“Our goal is that each coffee offers a warm and welcoming space with a good atmosphere and a seat for each occasion,” he told employees.

The company says that the new investment prioritizes stores that can be renovated in “persistent spaces”.

Expect more ceramic cups, softer seats, sockets and arrangements designed to slow customers rather than accelerating them through the door. Starbucks has completed its exercise with around 18,300 locations across North America, but store growth will not resume before 2026.

“Third place” once and future “

The price is high: Starbucks expects $ 150 million in starting costs and $ 850 million linked to closings and renovations. The announcement follows a previous investment of $ 500 million in Barista’s hours thanks to its “green deck service”.

But work tensions are looming. Starbucks Workers United, which represents more than 12,000 baristas, said that it would require negotiations on closings. Union leaders have warned that the cuts are likely to undervalue the very community atmosphere that Starbucks says it wanted to restore.

Beyond finances, the challenges are cultural. As Oldenburg argues, the third places are vital for social cohesion – spaces where people of all kinds can rub their shoulders. In recent years, many third places have disappeared, a trend accelerated by the pandemic.

“The public leisure space is essential for the company,” said Professor Gwendolyn Purifoye New York Times. “If you do not build places to come together, it makes us stranger and strangeness creates anxiety.”

(This story has been updated to include comments from the call for Starbucks gains about its power with Gen Z.)

Global Forum fortune returns on October 26 to 27, 2025 in Riyadh. CEOs and world leaders will meet for a dynamic event only invitation that shapes the future of business. Request an invitation.