Starbucks enters ‘new digital age’ with Toronto pickup store

Customers accustomed to hunkering down for hours to work or socialize won’t be able to do so at the newest Starbucks format that lacks seating and encourages people to grab their drinks and go.

Starbucks Canada announced Tuesday it will open what it calls a pickup store in downtown Toronto’s underground pedestrian complex, the PATH.

The move is part of a trend in which companies are experimenting with take-out only locations as restaurants tackle how to best serve customers who increasingly demand online ordering and delivery.

“Everybody is trying to figure out what’s the next great or what’s the appropriate store format in this new digital age,” said Vince Sgabellone, a food service industry analyst with market-research firm NPD Group.

The rise of food-delivery apps in Canada, including UberEats, Foodora and DoorDash, has accustomed consumers to feeding almost any whim on demand and prompted a rethink of traditional eatery formats.

Customers can still order and pay in person, a company spokesperson said in an email,

“but this is not the optimal experience for this store.”

The company piloted the concept in Seattle and opened the first location in New York City in November. Toronto’s Commerce Court spot is slated to open Feb. 4.

This new format “is designed to modernize and reimagine the customer experience in high-traffic, urban areas,” Michael Conway, president of Starbucks Canada, wrote in an email.

“Starbucks seems to be a perfect candidate for doing something like this,” said Joel Gregoire, associate director for Mintel Canada’s food and drinks reports.

In addition to coffee, Starbucks can also be considered a tech company, he said, pointing to its investment into the customer’s digital experience.

The company introduced its mobile app in 2010 and gave customers the ability to order online for in-store pick up in 2015.

That has given their customers time to get accustomed to ordering coffee digitally, Gregoire said.

Starbucks said it couldn’t share specifics as to what percentage of its sales come from digital ordering in Canada, but Conway said the company is

“seeing healthy growth” from active loyalty program members with the mobile order and pay option.

One of the business benefits for Starbucks is the lower cost associated with a smaller footprint, a company spokesperson said.

“The cost of property is exceptionally high,” Gregoire said of the commercial real estate markets in Toronto and Vancouver.

“If you can take steps to limit your footprint but still deliver a good quality meal … it probably helps you make a profit because you’re not paying for that dining space.”