Key Highlights :

Starbucks to close about 1% of North American stores and eliminate some 900 non-retail jobs as part of a $1 billion restructuring plan.

Over 1,000 stores to be redeveloped to build better customer experience and enable operations.

Closure follows six consecutive quarters of U.S. same-store sales declines because of inflation as well as changing consumer behavior.

Key Background :

Starbucks has struggled over the past few years as inflation, customer preferences, and competition ate away at its local U.S. market expansion. Under CEO Brian Niccol, hired in 2024, the company has made an effort to reboot its strategy by focusing on operating excellence and bringing back the brand's classic café experience.

Even as it expands into new shops, Starbucks has also been experiencing weakened traffic and sales in the stores that already exist. Inflation has been supported by resistance to buying at higher levels and operational constraints that served to generate wait times and substandard levels of service. All of these whittled away at the margins and caused the management to question the allocation of resources.

The $1 billion restructure will pay for lease exits, employee separation, and miscellaneous store closure loss store expenses. It will also partially finance investments in remodeled stores, including new equipment, remodel store design, and technology to enhance speed of service and customer satisfaction.

In addition to closing several of its shops, Starbucks will also cut approximately 900 back-office and non-retail positions as it tries to cut redundancies from its corporate end. The company also made it clear that front-line baristas are not the subject of cuts in force, and every effort possible will be made to redeploy affected employees from closings wherever possible.

The plan is one of incremental unionization at at some tens of Starbucks locations. The company leadership outright denies that company decision-making was being influenced by unionization, but the labor unions still maintain on opening up an investigation of the company's practices. This adds pressure to already strained business conditions.

In the future, the efforts will drive U.S. sales, increase in intensity, and release capital to chase strategic opportunities in global, high-growth markets, Starbucks said. The restructurings demonstrate that the company is willing to be flexible with its business model and remain profitable in the long term as the coffee market becomes increasingly competitive.

About the Author

Ryan Parker

Ryan Parker is a Managing Editor at Business Minds Media.