Starbucks announces closure of around 400 company-operated stores as part of US$1B restructuring initiative

NORTH AMERICA – Starbucks has revealed plans to close approximately 400 company-operated stores in the near future as part of a sweeping US$1 billion restructuring effort aimed at revitalizing its operations across North America.

CEO Brian Niccol announced the store closures on September 25, with most expected to occur in the coming days, coinciding with the fiscal year-end.

At the start of the fiscal year, Starbucks had 11,161 company-operated stores across North America, according to its FY2024 10-K filing.

Over the first three quarters, the company opened a net 292 stores, raising the total to 11,453.

However, with these closures, Starbucks expects the total to decline by roughly 1%, finishing the year with close to 11,050 stores.

The stores selected for closure are primarily underperforming locations or cafés where the company cannot deliver the physical environment customers expect or identify a clear path to profitability.

Factors influencing closures include poor location choice, decreased foot traffic, changing consumer habits favoring online or alternative consumption, and high operating costs, particularly in urban or oversaturated areas.

Starbucks aims to focus on more profitable, high-performing stores to optimize its retail footprint.

Niccol expressed that these decisions, while difficult, are necessary to sustain Starbucks’ long-term health, keeping the iconic coffeehouse experience alive and vibrant.

Employees affected by closures will receive assistance including relocation opportunities and severance packages where relocation is not feasible.

Alongside the closures, Starbucks intends to reduce roughly 900 corporate and support roles in non-retail operations, aiming to streamline its workforce and focus resources on stores and markets with higher growth potential.

Employee separation costs are estimated at US$150 million, while costs related to store closures and restructuring are expected to reach approximately US$850 million, mostly booked during fiscal 2025.

This plan is part of Starbucks’ strategic reset aimed at reversing six consecutive quarters of declining same-store sales, driven by shifting consumer behavior and increased competition.

The company is also working to restore the inviting coffeehouse atmosphere customers value, including reintroducing ceramic mugs and redesigning seating for improved comfort.

Niccol assured customers and employees that despite closures, Starbucks remains committed to its long-term growth plans, with store openings expected to resume in fiscal 2026.

This strategy highlights Starbucks’ efforts to balance operational efficiency, improve profitability, and continue delivering community-focused service in a highly competitive market environment.

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