Coffee chain Starbucks announced that it will be shutting down a few of its underperforming stores and eliminating about 900 non-retail jobs as part of an aggressive $1 billion restructuring plan. According to AP News, CEO Brian Niccol communicated the changes in a letter to employees and via regulatory filings. The stock reacted to the news with SBUX shares coming under some pressure to close at $83.83 on Thursday.
Starbucks is targeting stores where it sees no viable path to financial performance or where it cannot deliver the customer environment it expects. The cuts will mostly affect support and corporate roles; many open positions will simply not be refilled, Reuters reported. The company expects its North American store count to drop by about 1% for fiscal year 2025, factoring in both closures and new openings earlier this year.
Source: Yahoo Finance
In its filing, Starbucks said that it will allocate roughly $150 million toward severance and employee separation benefits, and $850 million toward store closure costs, lease exits, and associated infrastructure write-downs. Select closures are expected in the U.K., Austria, and Switzerland. Starbucks also plans to ‘uplift’ or redesign more than 1,000 stores over the next 12 months to make them cozier, warmer, and more community-oriented.
Starbucks’ broader turnaround strategy
Expressing awareness of the human impact the downsizing could have, CEO Niccol said, “During the review, we identified coffeehouses where we’re unable to create the physical environment our customers and partners expect … these locations will be closed.” He went on to add that. “Each year, we open and close coffeehouses … This is a more significant action … we understand will impact partners and customers.”
Starbucks has already endured six consecutive quarters of declining same-store sales in the U.S. as consumers have pulled back amid rising inflation. Under Niccol’s leadership, the company has embarked on a broader turnaround strategy by simplifying its menu, reimagining store layouts, and cutting costs. This marks the second major round of job cuts in 2025, following earlier reductions of 1,100 corporate roles.