Starbucks' former CEO says the retail real-estate crisis could be great news for the chain

  • In a recent memo to employees, Starbucks‘ executive chairman and former CEO, Howard Schultz, highlighted a big opportunity created by the retail apocalypse.
  • As demand shifts from stores to online, brick-and-mortar stores are closing at a rapid rate, creating an excess of vacant commercial real estate.
  • According to Reuters, which reported on the memo, Schultz is expecting rental rates to drop and for Starbucks to be a big beneficiary of the downward trend.

Starbucks is ready to cash in on the retail apocalypse.

As demand shifts from stores to online, a wave of retailers has announced store closings across the US, leaving surplus amounts of vacant real estate in prime areas.

Starbucks’ executive chairman, Howard Schultz, who stepped down as the coffee chain’s CEO last April to oversee its premium Roastery and Reserve projects, is ready to make the most of it.

Schultz noted in a memo to employees on Sunday that he has seen an “abundance of empty store fronts across the country” in prime locations, and is expecting rent rates to drop as a result of this, Reuters reported.

“This is GOOD NEWS for Starbucks and the future of our unit economics,” he wrote, according to Reuters. “This is not going to be a cyclical change in our occupancy expenses, but a permanent lowering of the cost of our real estate.”

With a massive store count of nearly 14,000 locations across the US, Starbucks is an obvious beneficiary of lower rental costs.

However, Schultz’s new premium Roastery and Reserve cafes could also be in line to benefit as these locations are slated to open in expensive locations such New York and Chicago.

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