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Starbucks $1 Billion Restructuring to Close Stores, Cut Jobs

A customer inside a Starbucks coffee shop in New York.Photographer: Angus Mordant/Bloomberg

A customer inside a Starbucks coffee shop in New York.Photographer: Angus Mordant/Bloomberg

Starbucks announced a $1 billion restructuring plan Thursday that involves closing some of its North American coffeehouses and laying off more workers as it moves ahead with its “Back to Starbucks” transformation under CEO Brian Niccol.

The number of company-operated stores in North America will decline by about 1% in fiscal year 2025, accounting for both openings and closures, the company said in an SEC filing. Starbucks operated more than 11,400 locations in North America as of June 29, suggesting that more than 100 cafes will shutter their doors as part of the restructuring plan.

Approximately 900 non-retail employees will be laid off on Friday, Starbucks said.

Starbucks estimates that 90% of the expected $1 billion restructuring cost will be attributable to the North America business. In total, the company expects to incur about $150 million in employee separation costs, plus about $850 million in restructuring charges related to the store closures, according to the filing. A significant portion of expenses will be incurred in fiscal year 2025, it said.

Starbucks said in the filing it is prioritizing investment “closer to the coffeehouse and the customer” as it looks to reverse a sales slump in its biggest market. The company’s same-store sales have fallen for six straight quarters, hurt by increased competition and price-conscious consumers.

This is the second round of layoffs in Niccol’s tenure, after 1,100 corporate workers were let go earlier this year. Starbucks ended 2024 with about 16,000 employees who work outside of store locations.

“These steps are to reinforce what we see is working and prioritize our resources against them,” Niccol wrote in a letter to employees Thursday. “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.”

In July, the company announced its biggest investment ever into labor and operating standards, “Green Apron Service,” which involves a more than $500 million investment in labor hours across company-owned cafes in the next year.

In an interview earlier this month, Niccol told CNBC, “I really hope we’re moving towards being the world’s greatest customer service company, [and] the world’s greatest customer centric company.”

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Author: Kate Rogers @in/katerog/ , Amelia Lucas @Thxamelian

Source: CNBC

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