How Luckin Coffee and Starbucks Are Reshaping US Chains

Starbucks has closed about 400 US stores, mostly in big-city cores such as New York, Los Angeles, Chicago, and San Francisco, as part of a $1 billion restructuring plan. New CEO Niccol said the company will stop chasing dense urban coverage. Meanwhile, Luckin Coffee has opened 9 stores in New York and keeps scouting sites, including small grab-and-go spots Starbucks vacated.

Starbucks attributes the pullback to tougher competition, remote work, population outflow from major cities, and rising operating costs. In New York, 42 closures equal 12% of its stores there, and the company lost its spot as Manhattan's largest chain coffee brand, according to the Center for an Urban Future. It now plans suburban growth and 1,000 store renovations within a year.

Starbucks is undergoing a deep strategic adjustment. According to foreign media reports such as CNN, this coffee chain giant has closed approximately 400 stores across the United States, mainly concentrated in core areas of major metropolises like New York and Los Angeles. New CEO Niccol has clearly stated that the company will no longer pursue high-density coverage of urban stores. Meanwhile, Luckin Coffee is actively expanding in New York, having already opened 9 stores and continuing to scout locations, including some small grab-and-go stores that Starbucks has vacated. Starbucks responded that intensifying competition, the prevalence of remote work, population outflow from major cities, and rising operating costs are the main reasons for the adjustment. In the future, it will increase its focus on suburban markets and plans to renovate 1,000 stores within a year to enhance the spatial experience.

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Recently, foreign media reports such as CNN have pointed out that the number of Starbucks stores in major U.S. cities like New York and Los Angeles is shrinking, and this coffee chain giant's rapid expansion phase may be drawing to a close.

It is understood that CEO Niccol, who joined Starbucks last year, once stated that he did not want Starbucks stores in cities to be too densely concentrated. Therefore, the company began adjusting its market layout this year. In September, Starbucks first announced that it would completely abolish the grab-and-go store model, affecting nearly 90 stores in more than 20 states across the country. Since then, the company has reviewed over 18,000 stores in North America and gradually closed a number of physical stores that "failed to meet performance targets or brand standards."

Reports show that as part of a $1 billion restructuring plan, Starbucks has closed approximately 400 stores nationwide, mostly located in major metropolitan areas. Specifically, 42 stores were closed in New York, over 20 in Los Angeles, 15 in Chicago, 7 in San Francisco, 6 in Minneapolis, 5 in Baltimore, and dozens more in other cities combined.

Data provided by the Center for an Urban Future, a New York City think tank that tracks chain brand store dynamics, shows that the 42 Starbucks stores closed in New York account for 12% of the city's total stores. As coffee shops shut down one after another, Starbucks has lost its position as Manhattan's largest chain coffee brand.

In response to media reports of large-scale store closures, Starbucks did not deny them, explaining that with increasingly fierce market competition, coupled with multiple factors such as the normalization of remote work, population outflow from major cities, and rising operating costs of branch stores, the company is re-planning its market layout, closing many branches located on the ground floors of downtown office buildings, and shifting its operational focus to the suburbs.

At the same time, a Starbucks spokesperson revealed plans to renovate 1,000 stores in the coming year, adding sofas, tables and chairs, and power outlets to optimize the spatial experience, thereby attracting and retaining customers who are willing to come in and enjoy their coffee.

It is worth noting that an exclusive report by the New York Post states that Starbucks will continue closing stores early next year. According to real estate professionals familiar with Starbucks' plans, 5 Starbucks stores in the New York City area will close because their leases expired and were not renewed.

In addition, several real estate agents who have previously worked with Luckin Coffee stated that Luckin opened 9 stores in New York City in just 7 months, and the brand is currently planning to further expand its New York operations. They mentioned that Luckin is very proactive in site selection and has inspected a large number of storefronts, including some small grab-and-go stores that Starbucks recently closed and vacated.

This development inevitably leads outsiders to speculate whether those coffee shops that once bore the green mermaid logo will soon be rebranded with the blue deer head logo and become a new sight in major American cities. However, regarding the New York Times' exclusive report, Luckin has not yet responded.

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