Starbucks ditches pickup-only stores as they 'lack warmth'

Starbucks says it will phase out its mobile order and pickup-only outlets because they "lack warmth", as the world's biggest coffee chain continues to shake-up its operations.

The company has around 90 shops in the US that have no seating for customers - an approach popular with some of its rivals.

The move will not affect the firm's mobile ordering service, which accounts for almost a third of transactions, the BBC understands.

Starbucks boss Brian Niccol made the comments after the company's earnings for the three months to the end of June showed that US same-store sales had fallen by 2% - the sixth quarterly decline in a row.

For the same period the company also reported that net income dropped by 47% to $558m (£418m) - worse than Wall Street expectations.

"We found this format to be overly transactional and lacking the warmth and human connection that defines our brand," Mr Niccol told investors on Tuesday.

The same level of convenience can be provided by its traditional cafes through mobile ordering, added Mr Niccol, who was appointed the firm's chief executive officer last year.

Instead, the company will prioritise "welcoming coffeehouses with great seats" and focus on delivering drinks in four minutes or less in its cafes and drive-throughs.

The BBC understands that some of the current pickup-only outlets will be converted to include seating.

Starbucks opened its first pickup-only outlet, which was designed to make collecting orders and delivery easier, in New York in 2019.

Mr Niccol is leading a "Back to Starbucks" initiative, which aims to provide better experiences for customers and boost the company's financial performance.

At least 1,000 of its cafes in the US will be revamped by the end of next year, with a new look and plans to replace thousands of seats that were removed, said Mr Niccol.

In April, Mr Niccol said the firm will hire more baristas and scale back plans to roll out automation.

The company is also revamping its menus and the company's dress code.

The chain has more than 41,000 outlets around the world.

Starbucks' shares rose by more than 4.5% in extended trading on Tuesday in New York.