Key Points:
- Starbucks will close underperforming stores and eliminate approximately 900 jobs, primarily in corporate support roles.
- The moves are part of a $1 billion restructuring effort as CEO Brian Niccol works to revive sales growth in the critical North American market.
- The company has posted six consecutive quarters of declining U.S. sales amid heightened competition and shifting consumer habits.
Starbucks announced a major restructuring plan on Thursday that includes shuttering underperforming stores in North America and cutting 900 jobs, as Chief Executive Brian Niccol presses ahead with his strategy to streamline the coffee chain and reignite growth.
The $1 billion effort comes as Starbucks grapples with six straight quarters of sales decline in the United States, where demand for its premium-priced beverages has been hit by more discerning consumers and intensifying competition.
In a letter to employees, Niccol said the company had conducted a thorough review of its operations.
“During the review, we identified coffeehouses where we’re unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance, and these locations will be closed,” Niccol said.
The company expects to complete the majority of the store closures by the end of this fiscal year, reducing its company-operated store count in North America by about 1%. Niccol stated that Starbucks will end the year with nearly 18,300 total locations—both company-operated and licensed—across the U.S. and Canada, down from the 18,734 locations reported in July.
Focus on Efficiency and Experience
Since taking over as CEO in August 2024, Niccol has focused on a dual strategy: investing in stores to reduce service times and restore a “coffee-house environment,” while simultaneously trimming management layers to cut costs.
The 900 job cuts announced Thursday will be concentrated in corporate support teams, and the company will also close many open positions. Starbucks employed about 10,000 people in non-coffee-house roles in the U.S. as of late September.
“This is a more significant action that we understand will impact partners and customers,” Niccol acknowledged.
Concurrent with the cuts, Starbucks is investing in store staffing and technology to streamline order sequencing and improve the customer experience. This focus on operational efficiency is a hallmark of Niccol’s playbook, honed during his successful tenure turning around Chipotle Mexican Grill.
Investors have largely supported Niccol’s vision, with Starbucks shares rising about 9% since he took the helm.
“I continue to like the turnaround story here as we continue to get more visibility into the future,” said Dave Wagner, portfolio manager at Aptus Capital Advisors, a Starbucks shareholder. “The company has always invested in innovation and becoming more lean will enhance the story moving forward.”
This restructuring is the latest in a series of workforce actions. The company announced plans earlier this year to eliminate 1,100 corporate roles, and in August, it instituted a modest 2% pay increase for salaried employees in North America.
Starbucks shares were down marginally in early trading following the announcement.