Starbucks to Close Hundreds of Stores, Cut 900 Jobs in Overhaul/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Starbucks announced it will close hundreds of North American stores and cut 900 nonretail jobs as part of a $1 billion turnaround strategy. CEO Brian Niccol said closures will target underperforming stores and those that fail to meet customer expectations. The restructuring comes amid falling sales, rising union tensions, and efforts to revive the brand’s long-term growth.
Starbucks Restructuring Quick Looks
- Closures Begin: Hundreds of U.S. and Canadian stores to shut down.
- Job Cuts: 900 nonretail employees to be laid off.
- Impact: 18,300 stores by fiscal year’s end — 124 fewer than 2024.
- Cost: $1B restructuring plan, including $150M in severance.
- Union Reaction: Starbucks Workers United vows to fight closures.
- Shares Slip: Stock fell less than 1% Thursday morning.
- CEO Strategy: Brian Niccol leads overhaul after six quarters of weak sales.
- Redesign Plan: Over 1,000 stores to be revamped within a year.
- History: Second major layoff in 2025 after February cuts.
- Future Expansion: Starbucks plans to add new stores next fiscal year.
Deep Look: Starbucks Closes Stores, Cuts Jobs in $1 Billion Turnaround Bid
SEATTLE — Starbucks is taking dramatic steps to revitalize its struggling coffee empire, announcing Thursday that it will close hundreds of stores across the U.S. and Canada while cutting 900 nonretail positions. The restructuring effort, which carries a $1 billion price tag, is one of the largest shakeups in company history.
The closures, which begin immediately, will shrink the company’s North American store count to 18,300 by the end of the fiscal year, down 124 locations from last year. As of June 29, Starbucks operated 18,734 stores across the U.S. and Canada.
CEO Brian Niccol said the decision was based on a thorough review of store performance and the customer experience.
“This is a more significant action that we understand will impact partners and customers,” Niccol wrote in a letter to employees. “Our coffeehouses are centers of the community, and closing any location is difficult.”
Focus on Efficiency and Design
Starbucks said the closures are aimed at locations with no clear path to financial sustainability or where customer expectations cannot be met. While the company rarely reduces store count during a fiscal year, executives emphasized that expansion will resume in the next cycle, along with a redesign of more than 1,000 stores to create warmer, more welcoming spaces.
The restructuring also includes $150 million set aside for employee severance and $850 million for lease exits and physical store closures.
Job Cuts and Remote Work
The layoffs affect nonretail employees, who were told Thursday to work from home through the end of the week. Starbucks said notices of termination will go out early Friday. Store employees at closing locations will be offered transfers where possible.
This marks Starbucks’ second round of major layoffs this year. In February, the company cut 1,100 corporate jobs worldwide and eliminated several hundred open positions as part of an earlier streamlining effort.
Union Pushback
The news immediately sparked criticism from Starbucks Workers United, the labor group that has organized workers at 650 company-owned stores since 2021. The union, which is still fighting for its first contract, accused Starbucks of making unilateral decisions without consulting its frontline baristas.
“Fixing what’s broken at Starbucks isn’t possible without centering the people who engage with customers day in and day out,” the union said. It vowed to engage in bargaining at every union-represented store slated to close.
Union tensions have been rising. Just last week, employees in three states sued the company over a new dress code, saying Starbucks refused to reimburse them for required clothing.
Starbucks insists that union representation was not a factor in determining which stores will close.
Financial Pressures Mounting
Starbucks stock dipped less than 1% Thursday morning, reflecting investor caution about the turnaround. The company has endured six consecutive quarters of declining same-store sales, largely due to weak traffic in U.S. locations. Niccol, a turnaround expert credited with reviving Chipotle, is betting that targeted closures, efficiency gains, and design improvements can reverse the trend.
The CEO has also invested in new software to streamline order fulfillment, aiming to ensure customers receive their drinks within four minutes. Additional staffing and cozier store layouts are part of the broader strategy to improve customer satisfaction.
What’s Next for Starbucks?
Despite the closures, Starbucks maintains ambitious growth plans. Niccol emphasized that the company intends to increase its North American store count next fiscal year and use the restructuring as a springboard for long-term expansion.
The plan represents a balancing act: cutting costs while redesigning the Starbucks experience to meet changing customer expectations — and while facing ongoing scrutiny from unions, investors, and customers alike.
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