Starbucks to close stores, lay off 900 workers as part of turnaround plan
Seattle-based chain reduces payroll for non-retail roles and shutters locations in North America to focus resources on reviving its brand, with severance offered to affected employees.
Starbucks said Thursday it will lay off about 900 non-retail employees and close an undetermined number of stores in the United States and Canada as part of a broader turnaround plan to revive its brand. The company said it would notify affected employees early Friday, signaling a significant restructuring as it seeks to redirect resources toward core business and growth initiatives.
A review of Starbucks locations found many are underperforming financially or failing to create the environment customers expect, according to a letter from Starbucks CEO Brian Niccol sent Thursday. “Each year, we open and close coffeehouses for a variety of reasons, from financial performance to lease expirations,” Niccol wrote. “This is a more significant action that we understand will impact partners and customers. Our coffeehouses are centers of the community, and closing any location is difficult.” The company said the evaluation identified stores that were falling short of financial targets or not meeting customer experience standards, prompting the planned closures and layoffs.
Starbucks said it expects to end its fiscal year with about 18,300 stores in North America, down 124 from a year earlier. The reshaping of the footprint underscores the company’s attempt to pare back what it views as underutilized real estate while prioritizing locations with stronger performance and brand alignment.
Niccol, described as a turnaround specialist, was brought in about a year ago to energize Starbucks’ growth strategy. He previously led Chipotle Mexican Grill for roughly six years, where the company saw a substantial rise in revenue and profits under his leadership. The moves at Starbucks reflect a broader effort to reset costs and refocus on core brand initiatives as the company navigates a competitive U.S. coffee market and evolving consumer preferences.
Starbucks said severance packages and other support will be offered to affected employees, though the company did not specify the exact terms. The layoffs, which target corporate and non-retail roles, come alongside the closure plan for some U.S. and Canadian stores. Management emphasized that such actions, while painful, are aimed at restoring long-term profitability and returning the brand to sustainable growth.
Industry observers note that the timing places Starbucks in a period of belt-tightening for many consumer-focused retailers that faced operational headwinds, including cost pressures and shifting foot traffic. Starbucks has signaled a willingness to accept near-term disruption if the strategy yields a stronger store portfolio and a more compelling customer experience over the longer term.
As the company moves forward, executives will monitor financial performance at the remaining locations and adjust the plan as needed. Investors and analysts will be watching how the restructuring affects same-store sales, profitability, and the pace at which the brand can regain momentum across North America. Starbucks did not provide a detailed timeline for the closing of stores or the exact number of positions impacted beyond the initial figure of about 900 layoffs, noting that more changes could be announced in the days ahead.