Starbucks to Close Stores, Cut 900 Jobs in $1B Restructuring
Starbucks CEO Brian Nickel announced a $1 billion restructuring initiative in a letter to employees on Thursday. The plan includes the closure of 1% of North American stores and the elimination of approximately 900 non- retail positions by the end of the fiscal year. Nickel took over as CEO of the coffee giant in August of 2024 and previously served as the CEO of Mexican fast casual restaurant Chipotle.
The company’s stock surged after the announcement, but over a year into Nickel’s tenure, the company has still struggled to correct stalling sales numbers. Starbucks has posted six straight quarters of declining same store sales, most recently posting a 2% global decline in their third quarter earnings. However, Nickel and other Starbucks executives remain confident that their back to Starbucks strategy will pay off in the long run. CFO Kathy Smith called the process a multi-year effort in the July earnings call, adding, quote, “We are rebuilding our core foundation on which we can scale and innovate to deliver the best of Starbucks customer experience.”
Starbucks did not disclose exactly which locations would close, but noted they would end the year with 18,300 stores across the US and Canada and would notify stores scheduled to close this week. The company said it would try to transfer employees at shuttering coffee shops to other nearby locations or offer comprehensive severance packages for those it can’t place.
The company will also lay off roughly 900 non- retail employees who will be notified on Friday morning following a previous round of layoffs that cut corporate jobs in February. Starbucks will also target more than 1,000 stores for renovations over the next year, Nichols said, which will quote, “Introduce greater texture, warmth, and layered design.” Starbucks shares remain mostly stable when markets opened on Thursday before declining slightly by 1.2% as of 10:00 a.m.