Why Starbucks thinks smaller stores will translate into more growth
Starbucks pivots to smaller store formats, aiming for 5,000 new U.S. locations.
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Starbucks plans to pursue an aggressive expansion strategy by opening 5,000 smaller locations in the U.S., aiming to improve unit economics and penetrate underserved markets. The new store formats will reduce required space and build costs, while still offering drive-thrus and in-store experiences.
Why It Matters
This expansion strategy may open up new territory opportunities for franchisees and impact unit economics positively, especially in underdeveloped markets.
Starbucks plans to expand its footprint by opening an additional 5,000 locations across the U.S., potentially growing to 10,000, through smaller store formats. This marks a strategic shift as the coffee chain seeks to establish a presence in underpenetrated regions, particularly in the Midwest, while also enhancing unit economics by reducing overhead costs associated with larger locations. Currently, Starbucks operates nearly 17,000 stores, with a mix of corporate and licensed units. CEO Cathy Smith articulated this shift at the Bernstein Conference, emphasizing that smaller stores—specifically around 1,350 square feet—will maintain essential features like drive-thrus, delivery, and in-store seating but require significantly less acreage, thus becoming more economically viable.
Starbucks experienced a reduction in store count by about 80 locations in 2025, underscoring its ongoing commitment to revitalization. The planned expansion will focus on areas from Texas to Virginia, with Nashville highlighted as a strategic growth hub, where there is a perceived need for more outlets. CEO Brian Niccol noted the company's previous West Coast-East Coast bias and expressed a desire to rectify this by targeting suburban markets that have room for growth.
