This month, Starbucks announced that its coffee delivery business is now a $1.0 billion business. Yes, that’s right, $1.0 billion. With a “B.” And, even more striking, in its most recent quarter, Starbucks also announced that said delivery business grew by almost 30%. Now, some out there might be thinking, “Okay, that’s interesting, but what’s the big deal?” Well, the big deal is that the implications of this statistic go far beyond just selling coffee.
The Experience Myth
For years, retail pundits have proclaimed that retail is all about the experience. The third place. The community gathering spot. The Instagram-worthy moment. And no company has been put up on the third-place pedestal more than Starbucks. Heck, Starbucks is actually a big reason why the term “third place” exists in the first place.
Howard Schultz built an empire on the idea that Starbucks was never about just selling coffee. It was selling an experience, that place between home and work where you could feel like you belonged. And you know what? For a long time, that idea worked brilliantly.
Then, for whatever reason – mobile ordering, the pandemic, changing demographics, who knows – something changed because now, as evidenced by the $1.0 billion in coffee orders coming via delivery, there is a large swath of Starbucks customers who potentially don’t care about its coffee house experience.
To put $1.0 billion into perspective, Starbucks’ total worldwide annual revenue in fiscal 2025 was roughly $37.0 billion, so delivery is likely nothing to sneeze at, particularly in the U.S. Moreover, when Starbucks’ U.S. comp store sales growth was flat last quarter, 30% growth in delivery also represents a fundamental shift in how people want to interact with the brand.
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The Billion-Dollar Wake-Up Call
With all that said, the $1.0 billion delivery announcement should serve as a wake-up call for CEO Brian Niccol’s turnaround strategy.
To date, Niccol has been front and center about his plans and efforts to enliven the third-place atmosphere of Starbucks. Niccol brought back elements like the condiment bar, set goals for coffee orders to be ready in four minutes or less, required new uniform standards, and also introduced ceramic mugs into the Starbucks operation. Starbucks has even gone so far as to tease a new “coffee house of the future” under Niccol’s tenure, while also announcing plans this past July to shut down all its remaining U.S. mobile order and pickup-only stores.
However, with 30% of all transactions already being made through Starbucks’ mobile app, combined with another billion dollars or so in delivery, it stands to reason that reenlivening the third place experience likely will not be enough to right the ship at Starbucks, for, with each passing day, it appears more and more people would prefer to just get their coffee and go.
Or, put another way, the nostalgic business model of Starbucks’ past is long gone and unlikely to return anytime soon.
The Dark Cafe Future
All of which begs the question – what should Niccol and Starbucks do?
Well, if they haven’t already, Niccol and Starbucks may soon discover that shutting down their mobile order pickup stores may not have been the wisest decision. Given the dynamics at play here, some type of “dark cafe” or “ghost cafe,” in which everything is automated for speed and efficiency, likely needs to be part of the equation. Otherwise, no matter how many upgrades the coffee houses get to their mugs and decor, in-store patrons will still need to battle an ever-increasing amount of mobile orders or, worse, third-party delivery drivers as they bump and elbow their way up to get their lattes.
Sure, maybe, the previous incarnation of the pickup-only stores wasn’t right, but lord knows a new version of them needs to come back and also get marketed to the public. Will a new standalone prototype, set to debut in 2026, solve the issue? We can only hope because Starbucks needs to start thinking about a bifurcated strategy, with some locations optimized for the sit-and-sip crowd, while other locations get optimized for fulfillment.
It seems like the demand for a dark or dark-like cafe format is there, and it could be the case that Starbucks’ now shuttered attempts were not executed and marketed to the public as well as they needed to be.
The Omnichannel Reality
What is most intriguing about the Starbucks conundrum is that retail nowadays is never one thing or the other. That’s the nuance here that is important to understand. Two things can be true at the same time, i.e. the customer’s desire for a great in-store experience and a great digital-first experience.
That is what omnichannel retailing is all about.
There are still people who want to sit in a Starbucks, work on their laptops, and meet friends for coffee. Those people aren’t going away. But they’re also not the whole market anymore, and nor are all the markets mutually exclusive. For example, a customer can be both – an in-store coffee lover and a mobile order fanatic. The beauty of omnichannel is that the customer decides what he or she wants to be on any given day of the week, not Starbucks. Starbucks is the enabler.
The stores that are full of people waiting for mobile pickup orders and delivery drivers? Those stores are telling us something. They’re telling us that the current infrastructure can’t handle both experiences well.
So the answer isn’t to choose one or the other. The answer is to build separate or redesigned infrastructure for the varying needs.
The Intentionality Trap
Finally, there is a much bigger lens through which to view everything that came out of Starbucks’ announcement.
It all comes down to the idea of intentionality versus reactivity.
Right now, most retailers are still in reactive mode. They are adding delivery because everyone else has it. They are improving their apps because customers complain. They are investing in automation because labor costs are rising.
But the best of the best retailers? The intentional retailers? They’re asking themselves: “What do my customers actually want five years from now? What trends are emerging that I need to place bets on today? And am I willing to cannibalize my existing business model to build the business model of the future?”
Those are the tough questions. Because answering them requires admitting that maybe the concepts on which one built his or her career, e.g., the beautiful stores, the carefully curated experiences, might not be what customers want anymore.
Why This Matters Beyond Coffee
Starbucks’ delivery statistics are emblematic of a fundamental shift in consumer behavior that’s affecting every category of retail.
Starbucks is feeling a disproportionate impact because Starbucks was the first to jump feet first into the deep end of the pool on mobile-order innovation, and this very same impact will begin to hit other segments of the industry, too, if it is not already.
Look at grocery. The exact same dynamics are at play. Traditional supermarkets are losing younger customers to Walmart and Aldi not just because of price, but because those retailers have figured out how to deliver convenience at scale.
Look at apparel. The stores that are thriving are not necessarily the ones with the best in-store experience. They are the ones that have figured out seamless omnichannel, easy returns, and fast fulfillment.
The pattern is consistent across every category. Consumers are increasingly willing to trade “experience” for convenience, speed, and value in the choose-your-own-adventure world of mobile-enabled commerce.
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The Investment Reality
Brian Niccol’s strategy at Starbucks of focusing on store operations and employee satisfaction is the right starting point. You can’t fix a broken foundation. But it’s just the starting point.
We are heading toward a world where “Starbucks” means different things in different contexts. In some neighborhoods, it’s still going to be that third place Howard Schultz envisioned. In other locations, it’s going to be a fulfillment center that happens to have the Starbucks logo on it.
And you know what? That’s okay. That’s actually good. Because it means Starbucks is finally matching its operating model to what customers actually want, rather than what the company wishes they wanted.
The coffee shop experience isn’t dead. It’s just not what 100% drives the business anymore. The addiction is what drives the business. The product is what drives the business. The omnichannel convenience is what drives the business.
Starbucks’ $1.0 billion delivery business, therefore, should not be viewed by anyone as a fun financial fact or a nice bonus tidbit, or as a pandemic hangover that’s going to fade. It’s a glimpse into the future of retail, a future where convenience trumps experience, where fulfillment infrastructure matters just as much and possibly more than store design, and where the retailers who adapt the fastest are going to be the ones who survive.
And, perhaps, just perhaps, Starbucks’ recent sale of a large portion of its stake in China will give Brian Niccol the capital he needs to make us all nostalgic for Starbucks again one day. Not the Starbucks of the past, mind you, but the Starbucks of the future.
Contributed to Branding Strategy Insider by Chris Walton, Co-CEO, Omni Talk;
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