Starbucks to close underperforming stores in restructuring efforts

Starbucks says it volition adjacent underperforming stores crossed North America arsenic CEO Brian Niccol pushes up connected a institution restructuring effort, which is expected to outgo $1bn successful a bid to revive the company’s flagging sales.

The java concatenation announced the determination connected Thursday.

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Overall, store number successful the United States and Canada is expected to driblet by 1 percent, oregon respective 100 stores, by the extremity of the 2025 fiscal year, including its iconic Seattle roastery.

Niccol is trying to reconstruct the chain’s “coffeehouse” consciousness to bring customers backmost to its outlets aft six consecutive quarters of declining US sales.

The cuts are expected to impact 900 workers and travel 1,100 firm cuts earlier this year. But the cuts are underscored by Niccol’s compensation bundle valued astatine $95.8m past year, 6,666 times much than the mean barista. It is the largest CEO-to-worker wage spread of immoderate institution successful the S&P 500, according to the Institute for Policy Studies’s 2025 enforcement excess report.

Unionised stores hit

Among the closed stores was Starbucks’s flagship unionised determination successful Seattle, a ample cafe with an in-house roastery, the institution confirmed.

Talks betwixt Starbucks and the Workers United union, which represents much than 12,000 baristas, began past April, but person deed a partition since.

In December, immoderate members of the national walked disconnected their jobs successful aggregate US cities successful a onslaught that spanned respective days during the highest vacation season.

Workers astatine the Seattle store, which is located adjacent its headquarters, voted to unionise successful 2022, and the national picketed the store connected Monday implicit declaration dialog disputes.

A unionised store successful Chicago, connected Ridge Avenue, was besides closed, the national confirmed. Baristas astatine the store were picketing connected Thursday morning, successful a program made earlier the store’s closure was known, the national said.

Baristas connected the picket enactment came from stores crossed the Chicago area. “We’re present to punctual the institution that it’s the workers who really bring the radical into the stores,” said Diego Franco, who came from a store successful the Chicago suburb of Des Plaines.

A Starbucks spokesperson said the national presumption of stores was “not a origin successful the decision-making process.”

In a statement, Starbucks Workers United criticised the closures. “It has ne'er been much wide wherefore baristas astatine Starbucks request the backing of a union,” the national said, adding that it planned to bargain for affected workers truthful they could beryllium transferred to different stores.

Analysts astatine TD Cowen estimation that astir 500 North American company-owned stores were affected by the restructuring.

Talks betwixt Starbucks and the Workers United union, which represents much than 12,000 baristas, began past April, but person deed a partition since [File: Matt York/AP Photo]

A revamp attempt

In his archetypal twelvemonth connected the job, Niccol has zeroed successful connected investing successful Starbucks’s stores to trim work times and reconstruct a coffee-house environment, portion besides trimming absorption layers.

The institution has posted a drawstring of quarterly income declines successful the US arsenic request for its pricey lattes took a deed from consumers turning picky and contention ramping up.

“During the review, we identified coffeehouses wherever we’re incapable to make the carnal situation our customers and partners expect, oregon wherever we don’t spot a way to fiscal performance, and these locations volition beryllium closed,” Niccol said successful a missive to employees.

The CEO said the institution would extremity the fiscal twelvemonth with astir 18,300 full Starbucks locations – company-operated and licensed – crossed the US and Canada. This compares to the 18,734 locations disclosed successful a July regulatory filing.

Niccol has enjoyed the assurance of investors since taking implicit aft his enactment astatine Chipotle Mexican Grill, wherever helium is credited with starring a turnaround astatine the burrito chain.

“Starbucks is taking much assertive actions wrong turnaround efforts. The store closures are much than we anticipated, portion we judge the layoffs acceptable wrong management’s antecedently announced zero-based budgeting framework,” TD Cowen expert Andrew Charles said.

Starbucks said connected Thursday the occupation cuts would beryllium successful its enactment teams and added the institution would besides adjacent galore unfastened positions.

The institution employed astir 10,000 radical successful non-coffee-house roles successful the US, arsenic of September 29, 2024.

“This is simply a much important enactment that we recognize volition interaction partners and customers,” Niccol said.

At the aforesaid time, Starbucks is investing successful improving staffing and incorporating exertion to much efficiently series orders astatine its java shops and heighten lawsuit experience.

The institution said earlier this twelvemonth it would destruct 1,100 firm roles. In August, it besides announced a humble 2 percent hike to each salaried employees successful North America this year.