In a bold move to streamline operations and refocus on core customer experiences, Starbucks Corporation announced Thursday that it will close approximately 1% of its company-operated stores in North America, alongside the elimination of about 900 non-retail positions.
The sweeping changes, part of CEO Brian Niccol’s “Back to Starbucks” transformation plan, are expected to cost the company around $1 billion in restructuring charges, primarily related to lease terminations and employee severance.
The announcement comes as Starbucks grapples with declining sales in its largest market, with U.S. same-store sales dropping for several consecutive quarters amid heightened competition from rivals like Dunkin’ and rising consumer sensitivity to prices.
Niccol, who took the helm last September after a successful tenure at Chipotle, emphasized in a letter to employees that the decisions prioritize investments “closest to the coffeehouse and the customer.”
“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 wrote.
Partners at affected stores will be notified this week, while the 900 impacted non-retail employees—primarily in support roles—will receive formal notices on Friday.
The company pledged “generous severance and support packages,” including extended benefits, to those affected.
Starbucks currently operates 11,453 company-owned stores in North America as of late June, with a total of 18,424 locations including licensed outlets.
After accounting for new openings over the past year, the net effect of the closures will reduce the company-operated footprint by about 1%, leaving roughly 18,300 total stores across the U.S. and Canada by the end of fiscal year 2025 on September 29.
While an exact number of closures wasn’t disclosed, analysts estimate 150 to 200 stores could be shuttered, focusing on underperforming or outdated sites unable to deliver the “warm and welcoming” atmosphere Niccol envisions.
This latest wave builds on earlier actions, including the planned closure of 80 to 90 “Pick Up” stores—mobile-order-only locations introduced in 2019—in over 20 states, with some slated for conversion to traditional coffeehouses.
The company also cut 1,100 corporate roles in February and froze hundreds of open positions as part of ongoing cost-control measures.
The restructuring expenses break down to approximately $150 million for employee separations, $400 million in asset write-downs, and $450 million tied to lease obligations, with about 90% of costs hitting North America in fiscal 2025.
Despite the immediate pain, Niccol framed the moves as essential for long-term resilience: “I believe these steps are necessary to build a better, stronger, and more resilient Starbucks that deepens its impact on the world and creates more opportunities for our partners, suppliers, and the communities we serve.”
To offset the closures, Starbucks plans to remodel over 1,000 locations and invest in its “Green Apron Service” initiative, which aims to boost staffing, personalize orders, and incorporate technology for faster service across 11,000 stores.
The company also recently approved a 2% raise for salaried North American employees in August, signaling a commitment to retaining frontline talent.
Reactions have been mixed. Starbucks’ shares traded flat in premarket following the news, reflecting investor caution amid the sales slump. Labor advocates, including the union Workers United, criticized the plan sharply.
“This announcement makes it clear things are only going Backwards at Starbucks under Brian Niccol’s leadership,” the group stated in an email to Newsweek. Ongoing tensions include lawsuits from employees alleging violations of labor laws over unreimbursed dress code costs.
As Starbucks shifts from expansion to optimization—scaling back new store openings in 2025 to fund redesigns—the coffee giant hopes to recapture its status as the go-to spot for quality brews and community vibes.
For now, the focus remains on supporting displaced workers and guiding loyal customers through the transition. Specific closure lists have not been released, but affected locations will shutter by month’s end.
