Starbucks is rolling out a compact store format across major cities to help navigate business challenges and rebuild its customer base, opening its latest prototype last month in San Antonio, Texas.
The new prototype features classic elements of traditional Starbucks cafes, including padded seating, fresh bakery items displayed behind glass display cases, and an espresso counter where baristas prepare beverages, but operates within a fraction of the floor space of a standard store.
Company executives designed the smaller layout to allow the coffee chain to expand into dense urban areas where commercial real estate costs are high. To accommodate narrower retail spaces, designers replaced traditional counters that run the full length of a cafe with a folded bar configuration.
Restoring the Third Place Concept
Despite reducing overall floor space, Starbucks preserved dedicated seating areas to encourage customer social interaction. The seating arrangement aligns with a central priority set by chief executive officer Brian Niccol to revive the chain's identity as a social third place outside home and work.
Dawn Clark, senior vice president of global concepts and design at Starbucks, said these specific new formats challenge the company to adapt to varied locations, formats, and sizes while maintaining every element of the coffeehouse experience.
Starbucks, founded in Seattle in 1971, built its global brand identity on offering welcoming spaces for customers to gather over espresso drinks. However, prior to Niccol taking leadership in 2024, the company shifted its focus primarily toward fast pickup orders placed through its mobile application.
During that operational shift, the chain removed 30,000 comfortable seats across its network, installed hard wooden stools, and covered electrical outlets to make cafes less appealing places for customers to stay.
Reversing Past Operational Changes
Sales suffered as a result of these changes, alongside other compounding factors including higher menu prices, longer wait times for pickup orders, and unappealing food options.
In 2025, as part of a $1 billion restructuring effort, Starbucks announced a massive renovation campaign. The plan brought back cozy seating, added power outlets, and offered free refills to encourage customers to remain in stores.
Starbucks has already redesigned 1,500 existing stores across North America under the initiative and plans to accelerate the pace of future renovations.
The company is applying aspects of its broader redesign project to the smaller prototype to prevent repeating mistakes from earlier pickup-only locations. In July 2025, Niccol closed small pickup-only stores after identifying them as excessively transactional.
Those pickup-only units featured sterile designs with no customer seating, forcing patrons to order strictly through the mobile application. Clark explained that designers used the failure of mobile-only stores as a case study to ensure the new compact format does not restrict how customers place their orders.
Multiple Ordering Options and Future Expansion
According to figures released by the company, mobile application orders account for approximately 30 percent of total customer transactions.
Clark told CNN that customers have varying needs depending on their daily routine and prefer to choose different ways of interacting with the company. She said the new compact locations support ordering in person, through delivery, via the mobile application, and at drive-thru windows.
Starbucks currently operates six units of the smaller prototype, including locations in San Antonio and Manhattan, the central borough of New York City. The company declined to disclose the exact square footage of the new design.
The chain has experienced mixed results in luring customers back to stores, having closed hundreds of North American locations over the past two years.
However, same-store sales in the United States turned positive in the most recent quarter, and the company plans to open approximately 5,000 new units in coming years.
Clark said designers learned key lessons from the 1,000 stores renovated so far and plan to use feedback from both customers and employees in the new smaller design. She noted that the process is highly symbiotic and that feedback regarding the cafe revitalization program has been overwhelmingly positive for both sides.
