The smaller format is designed to raise efficiency at neighboring retail stores, since it also serves as a centralized dispatch center for delivery orders within a close radius. Baristas at neighboring retail stores can focus on delivering service to in-store customers at these locations.

For example, during peak times, delivery beverage orders will be processed by baristas from a central kitchen at the new Starbucks Now store to ensure efficiency and quality.

The store is part of an ongoing innovation drive from Starbucks, as pressure increases from new challenger Luckin Coffee, affordable coffees at convenience stores as well as a trend among younger generations to consume hand-brewed tea beverages.

Luckin has opened 2,370 stores in 28 cities in China so far, mostly pickup stations. It plans to reach 2,500 stores by the end of this year to become the country's largest coffee chain operator in terms of number of outlets and cups sold.

In May, Starbucks China introduced the company's mobile order and pay system across 300 company-owned stores in Beijing and Shanghai, and later expanded the service to Hangzhou and Nanjing for a total of 1,300 stores across 4 cities.