Starbucks Announces Significant Store Closures and Layoffs
Starbucks is taking major steps to restructure its struggling business under CEO Brian Niccol. The company announced the closure of hundreds of locations in North America and a new round of layoffs at its headquarters. These moves mark a turning point as Starbucks seeks to regain growth momentum after a year of disappointing financial performance.
Scale of Closures
Niccol confirmed that Starbucks will shut down about 1% of its North American stores this month. The company had 18,734 stores at the end of June and expects to finish September with 18,300. The closures will cost Starbucks an estimated $1 billion as part of its restructuring program.
According to Niccol, the stores selected for closure were unable to provide the customer experience expected or lacked financial sustainability. While Starbucks regularly closes underperforming stores, this initiative is far larger in scale and more strategic in nature.
Impact on Employees
Alongside store closures, Starbucks will cut an additional 900 corporate jobs, on top of the 1,000 positions eliminated in February. Many unfilled roles will also be permanently closed. Employees affected by the layoffs will receive severance and support packages, but Niccol acknowledged the human impact of these decisions in a letter to staff.
Future Growth Plans
Despite the downsizing, Starbucks plans to remodel over 1,000 stores with a refreshed design. The new look will feature cozier chairs, additional power outlets, and warmer color schemes. These efforts are intended to modernize the customer experience and improve the chain’s appeal.
The company has also introduced menu changes, trimming about 30% of items while adding new options such as protein toppings, coconut water, and updated baked goods. Smaller updates include bringing back self-service milk and sugar stations, as well as adding doodles on coffee cups. The brand name has also been slightly tweaked back to “Starbucks Coffee Company” to emphasize its coffee heritage.
Challenges and Pushback
Some of these changes have sparked tensions with baristas. Uniform modifications even led to lawsuits, and new complex drinks have created stress during peak hours. This highlights the challenges Starbucks faces in balancing innovation with operational efficiency.
Financial Context
Niccol joined Starbucks about a year ago, aiming to revive the chain. However, results have not yet materialized: the stock has dropped about 12% and sales remain weak. The restructuring, menu adjustments, and store remodels are designed to reverse this trend and position Starbucks for long-term success.
Conclusion
Starbucks is at a crossroads. The company is closing hundreds of stores and reducing headcount, while simultaneously investing in remodels and menu innovations. The coming months will show whether these decisive actions can restore growth, improve profitability, and strengthen its position as a leading global coffee brand.