Starbucks (SBUX) CEO Brian Niccol said the company is putting a welcoming experience and safety first as 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 in the door. Niccol said the change was made due to feedback from customers and employees.
“In order to be the coffeehouse that we want to be, we need to bring some practical pieces to our Code of Conduct,” Niccol told Yahoo Finance. “Our first priority is our paying customers … that just makes a lot of sense.”
When asked if more security would be needed to implement the change, he said, “If we do need to have additional security, we’ll do it,” adding that the “No. 1 priority” is for employees to feel supported as they serve customers.
“They need to know that they’re safe, and they need to know that we’re going to be right there with them,” he said, noting that if there are cases where the economics don’t work, “we’ll close the store.”
Creating a premium store experience could be a key part of differentiation as drive-through coffee chains like Dutch Bros (BROS), Scooters, and 7 Brew continue to expand.
“I really do believe the combination of our partners, the quality of our coffee, the craftsmanship that we provide, and then the third-place experience that we can deliver, nobody else does it like us,” Niccol said.
Starbucks has the potential to double its footprint in the US, projected Niccol. The company currently has over 17,000 locations and opened 113 stores in North America in its most recent quarter.
But it’s not all good news.
“Unfortunately, there will be some stores that will have to close along the way so that we set ourselves up for success going forward,” he said. He pointed out 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,” compared to a 6% systemwide growth in fiscal 2024. The company needs to “accommodate upcoming redesigns and renovations while unlocking capital for broader turnaround efforts.”
She added that new US locations tend to outperform, contributing to “nearly 90% incremental sales within 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.
