Starbucks Closing Stores and Layoffs Workers As Part Of Restructuring Deal

ijr.com

Starbucks announced Thursday it is launching a sweeping $1 billion restructuring plan that will close hundreds of coffeehouses across North America and lay off nearly a thousand employees, as the company struggles to reverse a steep sales decline in its largest market.

The plan, filed with the SEC, calls for the total number of company-operated stores in North America to fall by about 1% in fiscal 2025. Analysts at TD Cowen estimate this will translate to around 500 net closures after openings and closings are combined. The company will end its fiscal year with nearly 18,300 cafes across the U.S. and Canada.

The company also confirmed that approximately 900 corporate, non-retail workers will lose their jobs starting Friday. In total, Starbucks expects about $150 million in employee separation costs and $850 million in other restructuring charges, most of which will hit in 2025.

CEO Brian Niccol, who took the helm earlier this year, said in a letter to employees that the changes are part of the company’s “Back to Starbucks” plan, which is focused on investing closer to the customer. He described the closures as necessary after a review of the portfolio revealed some cafes that could not meet financial expectations or customer standards.

The closures and layoffs mark the second round of cuts under Niccol’s leadership. Earlier this year, 1,100 corporate jobs were eliminated. Starbucks had about 16,000 non-store employees at the end of 2024, meaning more than 10% of those roles will now be gone.

The announcement comes as Starbucks faces falling same-store sales, which have now declined for six straight quarters. Analysts point to growing competition and customers who are more price-conscious in a tough economy. Shares of Starbucks dropped more than 1% in morning trading Thursday, extending a year-to-date slide of more than 8%.

The move follows other major initiatives Niccol has rolled out, including “Green Apron Service,” the company’s largest-ever labor investment. That program pledged more than $500 million in additional staffing hours across company-owned cafes. Starbucks has also slowed new store openings to focus on remodeling existing locations, aiming to restore the brand’s identity as a “third place” between home and work.

In his letter to employees, Niccol acknowledged the impact of the closures and layoffs on workers and families. Baristas at closing cafes will be offered transfers to nearby stores where possible. In cases where transfers are not an option, employees will receive severance packages. Niccol said the company hopes to welcome many back when Starbucks resumes store growth in fiscal 2026.

Starbucks Workers United, which represents more than 12,000 baristas across 650 cafes, said in a statement it plans to formally request bargaining over the closures. “We expect to engage in effects bargaining for every impacted union store, as we have done elsewhere, so workers can be placed in another Starbucks store according to their preferences,” the union said.

Niccol has also tightened operations beyond the cafes. Corporate employees will return to a four-day office schedule beginning next month. He has reshaped the company’s executive team as well, adding CFO Cathy Smith, Global Chief Brand Officer Tressie Lieberman, and COO Mike Grams, all of whom previously worked with him at Chipotle and Yum Brands.

For now, the company is betting that painful cuts today will help rebuild momentum after a year of shrinking sales. Starbucks plans to resume expanding its footprint in 2026, but in the meantime, both employees and customers are bracing for visible changes to the coffee giant that has long been a fixture in neighborhoods across North America.