Starbucks is closing more than 400 stores and laying off twice as many corporate employees.
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The Seattle-based coffee giant will end the year with nearly 18,300 North American locations, a decrease of more than 430 fewer stores compared to what the company reported in third-quarter results at the end of July. Starbucks also plans to renovate more than 1,000 locations as part of its effort to boost the customer experience.
“Our goal is for every coffeehouse to deliver a warm and welcoming space with a great atmosphere and a seat for every occasion,” CEO Brian Niccol said in a note on the company's website.
The closures are the result of a portfolio review that identified shops “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,” Niccol said.
The closures will decrease Starbucks overall company-operated location count by 1% after accounting for store openings. Starbucks also committed to opening more stores in 2026.
It said the closures and layoffs would cost the company roughly $1B in updated filings with the Securities and Exchange Commission this month. It estimates that it will spend roughly $600M to exit leases and provide employee separation benefits, and another $400M in noncash charges related to asset impairment.
Neither Niccol's online post nor the SEC filing provides the total number of stores set to close, and a Starbucks spokesperson declined to comment beyond what was publicly available.
The Starbucks that are slated to close will be notified by corporate headquarters later this week, according to the note. Niccol said the company will tranfer existing cafe employees to other locations or, where that’s not possible, provide severance packages.
The roughly 900 corporate employees being laid off will be notified Friday morning, and Starbucks told its employees to work from home through the rest of the week.
“To those partners who will be leaving, I want to say a profound thank you. To those continuing on our turnaround journey, I deeply appreciate your commitment to helping us get back to Starbucks,” Niccol said.
Activist investment firm Elliott Investment Management has built a sizable stake in Starbucks and leaned on management to boost profitability and share value. Amid the pressure, Starbucks hired Niccol away from the CEO position at Chipotle last August, promising to turn around the firm’s shrinking sales.
The coffee giant, which has more than 40,000 company-owned or franchised locations globally, reported a 2% decline in sales in the third quarter. Its North American locations pulled in $918M in operating income, with comparable store sales slipping 2% year-over-year.
Starbucks is facing increasing competition, but it isn't only from small, independent coffee shops in North America. China’s largest coffee chain, Luckin Coffee, also opened its first U.S. location in July, nearly a year after announcing a plan to enter the market.
Luckin Coffee currently has five locations in New York and has been quiet about the scope of its U.S. expansion. Its more than 20,000 locations in China have for years been competing with, and beating, Starbucks.
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