Starbucks Corp. is closing hundreds of underperforming cafés and cutting another 900 corporate jobs as part of a $1 billion restructuring plan aimed at reversing a prolonged sales slump in its largest market. The sweeping overhaul marks the second round of layoffs under CEO Brian Niccol, who has sought to revive the coffee giant's growth since taking the helm last year.
The Seattle-based chain said Thursday that the number of company-operated stores in North America will shrink by roughly 1% by the end of September, leaving it with about 18,300 locations. Starbucks had 18,734 stores at the end of June, meaning more than 400 cafés are set to close this month.
In a letter to employees, Niccol said the company had reviewed its footprint and determined which stores were "unable to create the physical environment our customers and partners expect, or where we don't see a path to financial performance." He acknowledged that the closures represent a "more significant action" than typical adjustments to its store base.
The company said the restructuring will cost about $1 billion, including $150 million in employee separation costs and $850 million tied to store shutdowns and other charges. Starbucks expects most of the expenses to hit in fiscal 2025. Shares were flat in premarket trading Thursday but have fallen more than 7% so far this year.
Despite the closures, Starbucks plans to remodel more than 1,000 locations over the coming year, adding warmer colors, additional power outlets, and cozier seating to encourage customers to linger. The redesign reflects a return to Starbucks' "third place" philosophy, positioning its cafés as gathering spots between home and work.
The layoffs affect non-retail staff across Starbucks' headquarters and field operations. Affected employees will be notified Friday and offered severance packages and transition support. The cuts follow 1,100 corporate job eliminations earlier this year, which reduced the company's non-store workforce to about 16,000 employees.
Niccol has also overhauled the menu, trimming 30% of items while adding on-trend products like protein toppings and coconut water to boost relevance with younger consumers. Last month, Starbucks launched its $500 million "Green Apron Service" initiative, investing in additional labor hours to improve service speed and reduce barista burnout.
