Starbucks to close stores, cut jobs as part of turnaround strategy

Starbucks CEO Brian Niccol announced Thursday that the coffee giant will close underperforming stores in the U.S., cut 900 non-retail partner roles and freeze many open positions as part of its ongoing turnaround strategy.

Niccol said in a letter to employees that during a review of Starbucks’ North America coffeehouse portfolio, the company identified locations that were “unable to create the physical environment our customers and partners expect” or where it does not see a “path to financial performance.”

The company opens and closes coffeehouses every year for various reasons, including financial performance and lease expirations, but Niccol said that “this is a more significant action” that will impact a larger swath of employees and customers.  

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Niccol didn’t disclose how many locations would be impacted, but said employees at the affected stores will be notified this week. Starbucks also plans to inform employees whose roles are being eliminated on Friday.

Niccol said the company has already opened numerous locations over the past year as he launched an aggressive “Back to Starbucks” strategy to help the company reverse its declining traffic and effectively compete in the highly saturated market, which means the company-operated store count in North America will only decline by about 1% in fiscal year 2025.

By the end of the fiscal year, the company will have nearly 18,300 total Starbucks locations that are company operated and licensed across North America. In fiscal year 2026, the company plans to grow the number of coffeehouses that it operates, with more than 1,000 locations getting an “uplift” with the company’s new interior design over the next year. 

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Just a year into the job, Niccol has said the company is “ahead of schedule” in its turnaround, but told employees Thursday that much more work remains to build a more resilient company. That includes carefully managing costs and focusing on the key areas that drive long-term growth.

“These steps are to reinforce what we see is working and prioritize our resources against them,” Niccol said. 

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A year ago, Niccol became Starbucks’ third CEO in two years, inheriting a company that faced pressure from unionization campaigns across the nation and back-to-back disappointing fiscal quarters as traffic declined. As he enters his second year on the job, traffic is still under pressure as broader environmental factors have caused consumers to be more mindful of where they spend money. 

The company’s turnaround plan focuses on reviving the coffeehouse aesthetic through redesigned interiors that encourage customers to linger, along with “personal touches” such as serving drinks in mugs and writing names on cups with Sharpies. Another priority is improving operations by ensuring stores are properly staffed, streamlining mobile orders, letting customers handle their own condiments and committing to having all drinks ready in four minutes or less.

Niccol noted on Thursday that “early results from coffeehouse uplifts show customers visiting more often, staying longer, and sharing positive feedback.” He also said that the company’s efforts to ensure stores are staffed correctly, particularly during its peak times, has already led to a boost in transactions, sales and decreased wait times for customers.