Starbucks in the New York City area has been shifting locations, opening up new retail shops and closing under-performing ones. At the same time, it has been introducing new drive-thrus and retail shops in the Hudson Valley, about 100 miles north of the city.
For example, in the West Village in Manhattan, it shuttered a series of neighborhood locations including at Bank Street, Bleecker Street near Sixth Avenue, 10th Street and Hudson Street while opening a larger Starbucks Reserve on 7th Avenue and 11th Street.
And its massive, 23,000 square foot, tri-level Starbucks Roastery is located on 9th Avenue and 15th Street, across from the Chelsea Market, and just blocks from the West Village.
But in the Hudson Valley, it’s been expanding its presence, which has traditionally been rather scarce. For example, the Starbucks in Kingston had been there for years, but in 2023, it opened a new outlet in Lake Katrine near Kingston on August 24th, across from Adams Fairacre Farms grocery store, and a new outlet in Saugerties off of Route 212 near the NY State Thruway entrance, a very busy thoroughfare.
Starbucks has closed several storefronts in Manhattan, opened up larger stores, and has begun to expand in the Hudson Valley, which has seen a population spurt.
Starbucks View of Its Movement Upstate
Asked why it has expanded in the Hudson Valley, its press representative wrote, “Starbucks is always looking for great locations to better meet the needs of our customers. We continually evaluate store portfolio, using various criteria to ensure we are meeting the needs of our customers.”
But when this reporter asked to interview a general manager from Starbucks about its expansion in the Hudson Valley, the press rep replied, “At this time, we must politely decline your request to participate in an interview.”
During the first year of the pandemic alone, the Hudson Valley region had a net gain of over 30,000 people from New York City, according to Pattern for Progress. Even if those numbers are relatively small, that’s still a population boost so Starbucks may be following its customers.
Why They’re Closing Manhattan Locations
Why did they close so many Manhattan storefronts? Andrew Moger, a vice-chairman of RIPCO Real Estate, founder and CEO of BCD Strategic Investments, and director at Metro Donut, which runs Dunkin’ franchises in Brooklyn, Queens and Long Island, said many closings were due to leases that were signed 10, 15 or 20 years ago that were running their course. Hence Starbucks could be facing rent increases, he suggested, and some were still feeling the effects of the Covid slowdown.
Moreover, neighborhoods in the city are constantly going through changes. “What was the 50-yard line 10 or 15 years ago,” may not be as prime today, Moger noted.
Starbucks Knows Its Customers and Where They’re From
Moger also noted that Starbucks has advanced technology that reveals where all their guests are coming from. Hence once it opened its larger Starbucks Reserve on 7th Avenue, it may have recognized that it could serve most of its existing customers within that locale from one central store, eliminating the need for three hefty rents.
Opening in the Hudson Valley, an area that Moger deems part suburban and part rural, opens up “white space” or room for growth. These areas have become denser, partially due to more people moving out of New York City, with the ability to work remotely and in search of less expensive housing.
Starbucks has such extensive brand recognition that it’ll be well-known to most consumers upstate. In these areas, “people will drive further for things than people in the city. Coffee is a convenience item and people need it on their way to work or for an afternoon pick-me up,” Moger said.
There will be some naysayers who aren’t thrilled by the intrusion of Starbucks. “Some people in these areas look down their nose at an international brand coming into a small town,” he added.
In the future, Moger experts Starbucks to “continually assess if they can upgrade a location based on changing market conditions. In any new market, there’s some risk and some testing that goes into it. As leases expire, Starbucks will continue to try to optimize their position in these trade areas.”
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