Starbucks sees expansion opportunities amid massive storefront closures
Starbucks Corp., the world’s largest coffee chain, is looking to take advantage of lower rentals in the prime locations in the United States as a result of massive defaults of storefronts amid the rise of e-commerce.
In a memo released last week, Starbucks Chairman Howard Schultz said that empty storefronts is “a blessing” for the company, which has more than 14,000 locations across the U.S.
With e-commerce quickly becoming the norm and stores shutting down shops because of low foot traffic, landlords are now forced to lower their rentail rates — including those considered as prime A1 locations. Schultz said that this situation now presents an opportunity for the coffee chain giant to expand and relocate its stores to a much better location, with the least rental rate for the next several years.
To recall, Starbucks suffered massively during the real estate upheaval, which led to the shutter of some 400 Teabana stores. This was attributed to high rental and poor foot traffic, as well as strong competition from other cheaper coffee shops.
But despite the opportunity being widely open for the company, the executive said that they should remain cautious, patient and disciplined in their approach, noting that situation is not going to be a cyclical change in occupancy expenses, but a permanent lowering of the cost of real estate.