Starbucks to close stores, cut 900 jobs in US$1 billion restructuring

The company says its overall store count will drop by 1% during the 2025 fiscal year

Starbucks said it will close stores and eliminate 900 jobs in a US$1 billion restructuring effort as the company amps up a turnaround plan under new chief executive officer Brian Niccol.

The company said its overall store count will drop by 1 per cent during the 2025 fiscal year, ending with 18,300 total locations across the US and Canada. After that, it plans to grow the number of stores it operates and refurbish another 1,000 locations.

After a review of its coffeehouses, the company identified a number of stores where it could not see a path towards profitability and decided to close them. It plans to focus on stores that align with Niccol’s plan to make its restaurants a more inviting place to visit.

“Early results from coffeehouse uplifts show customers visiting more often, staying longer and sharing positive feedback,” Niccol said in a letter to employees on Thursday (Sep 25).

Niccol, who took the helm a year ago, is attempting to lead a turnaround at the coffee chain after six straight quarters of same-store sales contractions. The plan centres on reviving locations by adding seating and electrical outlets to encourage more visits for longer durations.

Those changes have yet to make a meaningful dent in the Seattle company’s financial performance and this marks the second round of layoffs under Niccol.

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The company’s shares were up less than 1 per cent in premarket trading. The company’s stock was down 8 per cent as of Wednesday’s close, compared with a 13 per cent increase in the S&P 500 Index.

Most recently, Starbucks reported sales and profits that missed expectations for the fiscal third quarter. The company is also facing increased competition from smaller chains in the US and China, its two largest markets, that are cranking out cheaper beverages to customers at a faster rate.

Starbucks is paring down its menu to reduce drink complexity – a bid to lessen wait times – and to make room for new items that better match changing consumer tastes. The cafe operator has increased its sugar-free options and introduced protein-infused beverages as customers seek healthier options.

Analysts and investors, while generally in favour of the changes, have grown wary of the cost and timeline of Niccol’s plan. Profitability worsened last quarter due to the investments aimed at revitalising the brand. BLOOMBERG