Starbucks (NASDAQ:SBUX) plans to invest about $1 billion in upgrades to its North American cafes as part of changes intended to encourage customers to spend more time in its stores, according to a Financial Times report.
The coffee chain is planning renovations across as many as 9,000 company-operated locations in North America, the FT reported, citing Dawn Clark, Starbucks’ senior vice-president of coffee house design and concepts.
The changes are expected to cost approximately $150,000 per store.
Around 1,500 locations are expected to have completed the upgrades by the end of September, according to the report.
Starbucks Renovations Include Seating and Furnishing Changes
The renovations, which Starbucks calls “uplifts,” include the addition of chairs, rugs, bookshelves, plants and softer furnishings, according to the FT.
The changes are linked to Starbucks’ “third place” concept, which positions its cafes as spaces for customers to spend time outside their homes and workplaces.
The FT reported that the investment forms part of Chief Executive Brian Niccol’s turnaround plan following the company’s performance over the past two years.
According to the report, Starbucks says the upgrades can be completed overnight and at a lower cost than its previous store remodels.
Starbucks Targets $2 Billion in Cost Savings
Alongside the cafe investment, Starbucks is targeting $2 billion of cost savings over the next two years.
The planned renovations and cost-reduction programme are being pursued concurrently as the company changes its North American store environment and operating cost base.
The Financial Times report said Starbucks is making the investment on the expectation that customers will spend more time in its cafes and purchase additional drinks. That outcome represents an expectation rather than an established result of the renovation programme.