Starbucks and the Myth of the Third Place

The year is 1999, and you’re on your way home. It’s dusk, there’s a chill in the air, and you’re feeling the need for a pick-me-up. A warm light on the horizon appears: a green and white logo that pulls you in. You push open the glass door and enter the softly lit, cosy, and welcoming environment. It smells like coffee and cinnamon. 

In front of you, there’s a counter with a glass pastry case. A smiling face in a green apron welcomes you, and you place your order: a tall skinny half-caf cappuccino (these are all real words, even if they haven’t yet entered the general lexicon). As the barista turns away to make your drink, you look around and see comfortable chairs and sofas, atmospheric lighting, people happily chatting or reading books. Soft jazz plays over hidden speakers, blending with the sound of milk being steamed.

Your name being called jolts you from your reverie, and you turn around to see the smiling barista now holding out a white paper cup. You take it, thank them, and find a seat—something plush and red. After making yourself comfortable, you take a sip of warm milk with just a hint of coffee flavour, and let out a deep sigh. 

This is the mythical third place: a welcoming gathering spot, a public space other than work or home.

Well, it’s Starbucks’ version of a third place, anyway. The company worked hard throughout the ’90s and into the 2000s to develop and sell itself as a community hub, a place where people could drink coffee, connect, and find a sense of belonging. It was the place you met up with friends after school, where you came to take a break from work, where you took a date on a weekend afternoon.

In 2018, on the eve of one of his many departures from the company, then-CEO Howard Schultz wrote an open letter to Starbucks’ partners (what the company calls its employees). “Great coffee and our stores will always be catalysts for community”, he wrote. “Now more than ever the world needs places to come together with compassion and with love. Providing the world with a warm and welcoming third place may just be our most important role and responsibility, today and always”.

But Starbucks didn’t stay true to Schultz’s vision, and in fact was already turning towards a more efficient model. When the COVID-19 pandemic hit and foot traffic collapsed, the company doubled down on shifting its focus to drive-throughs, mobile ordering, and delivery. It removed chairs and tables from its cafes, and built new stores as pick-up-only locations. Customers—understandably, in the midst of a cataclysmic airborne plague—wanted their coffee quickly and with as little human contact as possible. But even as lockdowns eased and customers returned, the stores did not encourage them to linger as they once had.

Perhaps not coincidentally, Starbucks has struggled over the past year or so as its sales and stock price have fallen. Pushing promotions and customisations to tempt younger generations into its stores has led to long lines, overworked baristas, and annoyed customers.

Now, new CEO Brian Niccol has promised to return Starbucks to something closer to Schultz’s original vision. But is that even possible? And did Starbucks ever truly represent the third place in the first place?

‘Escape, Reflect, Read, Chat or Listen’

Although he didn’t found the company, Howard Schultz was instrumental to Starbucks’ massive growth from the late 1980s onwards. In many ways, the brand that we see on every street corner today was built in his image.

In a 1995 annual report, the then-CEO summed up his vision for how he wanted the chain to be perceived: “At home, you’re part of a family. At work you’re part of a company. And somewhere in between there’s a place where you can sit back and be yourself. That’s what a Starbucks store is to many of its customers—a kind of ‘third place’ where they can escape, reflect, read, chat or listen”.

The term “third place” is often synonymous with Starbucks—and this is by design. Many  assume that Schultz coined the phrase, something that he never tried too hard to disavow. “He often talks about it as if he made up the concept”, says Bryant Simon, the Laura H. Carnell Professor of History at Temple University and author of the book ‘Everything but the Coffee: Learning About America From Starbucks’.

As Simon points out in his book, Schultz used the phrase constantly in interviews and speeches to build a connection between the concept and his company: “His stores, he tells talk-show hosts, journalists, and stockholders, are places between work and home where people can meet, unwind, establish connections, and deepen their sense of community”.

But Schultz didn’t actually coin the phrase “third place”; he merely co-opted it. It was sociologist Ray Oldenburg who came up with the concept, and wrote about it in his 1989 book ‘The Great Good Place’. The third place, Oldenburg wrote, “is a generic designation for a great variety of public places that host the regular, voluntary, informal, and happily anticipated gatherings of individuals beyond the realms of home and work”.

Coffee shops—along with bookstores, bars, hair salons, and community centres—were, for Oldenburg, key modern examples of what he called the third place. Historically, the role was played by public spaces like Greek agoras or Roman forums, or, later on, by Chinese teahouses and English coffeehouses and taverns. 

Up until the latter part of the 20th century, the United States had its own distinctive set of third places—from saloons and general stores to soda fountains and even post offices—but Oldenburg saw those spaces disappearing with the spread of suburbia. He wrote in a 1996-97 article for the Planning Commissioners Journal that “most residential areas built since World War II have been designed to protect people from community rather than connect them to it”. Without community, existence became “a life style consisting mainly of a home-to-work-and-back-again shuttle”.

‘Oh, and Drink Coffee Too’

“Starbucks was notable for spacious, comfortable seating in [the] early days. It was the usual place to find a seat and Wi-Fi and electricity in a strange city, and a common place to meet friends”, says Karen Christensen, an author and Oldenburg collaborator whom he asked to co-author an upcoming updated version of ‘The Great Good Place’.

As Simon recounts in ‘Everything but the Coffee’, the idea of Starbucks as a place to linger over a coffee grew almost organically: He calls it “an accident of real estate”. When the company looked to expand to New York City in 1993, it wasn’t able to find prime real estate downtown so began opening stores, ironically, in the suburbs.

These stores brought in unexpectedly high profits, partly because people were hanging around longer. “Soon an employee got the idea of putting a couch in the corner, and people sat there—and the people in line liked the look of things and the promise of comfort, connections, and conversation”, Simon wrote. “So Starbucks had a new template: it was not just a repository of coffee knowledge or a dispenser of authenticity or a producer of predictability; now it was also a maker of socially vital third places”.

This perception of Starbucks as the ultimate community gathering space trickled down from the CEO to its own workers. The company’s PR department uses the term “third place” liberally when announcing new stores, Simon points out, and the phrase even shows up in its training manual. In a 2008 article for Fast Company, Matthew Dollinger interviewed a Starbucks manager referred to as Kelly about the company’s approach. “We want to provide all the comforts of your home and office”, Kelly told Dollinger. “You can sit in a nice chair, talk on your phone, look out the window, surf the web … oh, and drink coffee too”.

In the years since, those reasons to linger in a Starbucks have slowly disappeared. Someone who has more insight than most into the evolution of the Starbucks experience is Winter, who, since 1997, has travelled the world in an attempt to visit every Starbucks on the planet. “Starbucking”, as Winter—who legally changed his name to a mononym in 2006—calls it, has taken him to nearly 20,000 stores across 70 countries. He has seen first hand how the company’s focus has changed over the years. 

“The third-place concept is one of the things that made Starbucks successful”, Winter tells me. “In the ’90s, when Starbucks came about, they were really novel, and there weren’t many places in a city where you could sit down and get a cup of coffee and enjoy the third place”. As the years wore on and more coffee companies began to compete, Winter says that Starbucks worked hard to improve the customer experience. “They were fast to jump on Wi-Fi. Their stores expanded the number of electrical outlets, larger stores with more seating—you could count on Starbucks for clean bathrooms and also excellent customer service”.

The Commodification of the Third Place

Over the past decade or so, this focus has shifted. Starbucks’ massive growth and global reach mean it has become less distinctive, which, according to a piece in the marketing and technology publication MarTech, “compromised the unique ambiance and sense of community once integral to its success”. The chain began to focus more on drive-through outlets to boost revenue. Meanwhile, leaner, lower-cost coffee startups in countries like China were eating into its market share and forcing it to cut prices and focus on promotions.

Where once the brand invited customers to linger—assuming they could pay significantly more than its competitors for a coffee, with all the accompanying class and income implications—Starbucks’ modern iteration is far less welcoming. Its ubiquity and extended opening hours, as well as the Wi-Fi and bathrooms, have made it a popular destination for America’s growing population of unhoused people. This has led to tensions between the company’s stated aim to be a community space and those who need a place to simply exist: Starbucks became “tangled up in LA’s homelessness crisis”, according to a 2016 NPR article, with some locations closing their bathrooms completely in response.

Who is welcome within Starbucks’ stores took on another layer of complexity when, in 2018, two Black men were arrested in a Philadelphia location for not making a purchase while waiting for a business meeting. A video of the incident went viral, and the furore led to Starbucks closing all its U.S. stores for an afternoon of employee unconscious bias training.

Slate put together a roundtable discussion following the incident, during which writer and sociologist Tressie McMillan Cottom summed up Starbucks’ skewed version of the third place: “The Starbucks third space is a place where white people can consume an idea that they’re being in a diverse public, while their $5 coffee buys them the safety of a barista who can call the police on someone to keep the space safe for them”. 

The Great Repositioning

Then the pandemic arrived, in the process speeding up Starbucks’ transition towards a new kind of quick-service coffee company. In June 2020, the company announced that it would close 400 stores as it “repositioned” its business to focus on drive-through and pick-up locations. The goal was to “enhance the customer experience, expand our retail presence and enable profitable growth for the future”.

As a result, when lockdowns eased and people returned to coffee shops, “the Starbucks interior lost its appeal”, Christensen says. “As we consider coffee shops as tomorrow’s third places, we might look at things [that] kept Starbucks from being a third place even before the pandemic”.

In a 2024 article in Harvard Business Review, B. Joseph Pine II and Louis-Étienne Dubois explored the myriad ways that Starbucks has “commoditiz[ed] itself” over the past decade. Some of these changes have been to the physical environment: “Comfy chairs have largely disappeared, replaced by hard wooden ones, the better to push people back out to their homes and offices. The company has also turned finding electrical outlets to plug in computers or phones into somewhat of a treasure hunt”.

The authors also note the preponderance of drive-throughs, which “increased sales while decreasing the on-premise experience”, and a focus on mobile ordering which “places you and your in-house order in an invisible queue of indeterminate and sometimes seemingly interminable length”. The increased use of promotions and sales—alongside more focus on customised, social media-friendly drinks—has also put added pressure on workers who have to deal with long lines, complicated orders, and belligerent customers.

Starbucks once ranked highly on lists of best employers, but deteriorating working conditions culminated in the union drive which began in 2021 and has since spread across the United States. The union has organised several strikes over the increased pressures placed on workers. These complaints over working conditions, according to Pine and Dubois, are indicative of a “disconnect between performance metrics geared toward sales volume and those focused on the quality of the connections with customers”.

The Return of the Welcoming Coffeehouse?

Although he has left the Starbucks CEO role on multiple occasions, Howard Schultz likes to keep a close eye on how his baby is doing. (This may or may not have something to do with the almost $2 billion in shares he still holds in the company.) Earlier this year, when revenue began to fall slightly under the watch of CEO Laxman Narasimhan, Schultz blogged about it on LinkedIn, criticising the company’s emphasis on data and urging it to “focus on being experiential, not transactional”.

Narasimhan had taken the reins in March 2023, just a few months after Starbucks—with Schultz still in charge—announced that it was “reimagining the Third Place” in order to “adapt to the changing needs of customers and store partners”. This included more focus on cold drinks, customisations, and convenience. Mobile ordering would be “enhanced” while “Web3 technology” would “augment and extend that feeling of connection with customers”. The third place, in other words, was going virtual.

By August 2024, having presided over a 20% fall in stock price and an underwhelming quarterly revenue report, Narasimhan was out. He was replaced by former Chipotle and Taco Bell CEO Brian Niccol, who has promised to “make Starbucks a coffee shop again”, as CNN put it. “There’s a shared sense we have drifted from our core”, Niccol wrote in an open letter shortly after taking over. “We’re refocusing on what has always set Starbucks apart—a welcoming coffeehouse where people gather, and where we serve the finest coffee, handcrafted by our skilled baristas”.

Will Starbucks actually change? Analysts are sceptical. “It’s hard to satisfy both that third-place customer as well as that convenience customer in the same location”, R.J. Hottovy from the  location analytics company Placer.ai told Restaurant Dive.

Starbucks has shifted its focus so heavily towards non-cafe coffee shops, and poured so much money into opening convenience-driven stores, that it’s hard to see how it can go back to comfy sofas and Norah Jones CDs. “All these things that they’re doing seem sort of tailored to getting people to just buy their coffee and go—and that is not the third place”, Winter says.

Performance and Sham

But for all the brand’s claims over the years, did Starbucks ever truly represent the third place?

“This isn’t surprising, but almost everything Starbucks does is a performance, right?” says Simon. “It’s a performance to engage the audience to buy more coffee, but like all performances, they hinge on the appearance of authenticity”.

Schultz used this appearance ingeniously, marketing Starbucks as the community gathering space. However, as Christensen points out, a company like Starbucks was never supposed to be the emblematic third place. “Coffee shops are probably the quintessential example of a third place, at their best and most local, so it’s a shame that the term is associated with Starbucks”.

In Oldenburg’s original description, third places were meant to be welcoming to all, and specifically non-commoditised. “In the absence of informal public life, living becomes more expensive”, he wrote in ‘The Great Good Place’. “Where the means and facilities for relaxation and leisure are not publicly shared, they become the objects of private ownership and consumption”.

Starbucks has embraced the commodification of the third place like almost no other company. During the Slate roundtable, McMillan Cottom noted how the company had twisted Oldenburg’s idea of “regular, voluntary, informal, and happily anticipated gatherings of individuals beyond the realms of home and work” into something more exclusionary.

“They commodified this idea of the ‘third space’—the space that isn’t home and that isn’t work”, McMillan Cottom said. “The thing is, this space is supposed to be made by the culture. Starbucks said, ‘Oh no, we will make it about consumption.’ And black people are always going to lose in that version of a third space, because the right to transact is lost when all the ideas of property and police become a tool for a basic-ass cup of coffee”.

Simon interviewed Oldenburg before his death in 2022, and he described how Starbucks once tried to hire him as a consultant. “He didn’t do it because he felt like you couldn’t have really corporately conceived third spaces”, Simon explains. “Third spaces, in his mind, had to be organic, and really had to feature a connector at the centre of it, often the owner of the place, or somebody who worked pretty regular hours. And so he felt like it was kind of a sham from the get-go”.