Starbucks is planning to close hundreds of stores and lay off close to 1,000 employees as part of a turnaround effort.
In a message to employees, Chief Executive Brian Niccol said the cost-cutting moves were necessary. Store closures will begin immediately, and the affected employees will be notified on Friday, Niccol said.
The company has been revamping its slowing business and announced layoffs of more than 1,000 corporate employees earlier this year. This round of layoffs will affect only non-retail employees, Starbucks said.
Niccol did not specify how many stores would close, but said the company will end its fiscal year with nearly 18,300 stores across the U.S. and Canada. As of June 29, the company had 18,734 stores.
“Our coffeehouses are centers of the community, and closing any location is difficult,” Niccol said in the message to employees. “While we’re making good progress, there is much more to do to build a better, stronger, and more resilient Starbucks.”
Accounting for both openings and closures, Starbucks’ store count will have decreased by about 1% at the end of fiscal year 2025, Niccol said.
The company said its restructuring efforts would cost $1 billion, including $150 million on employee separation benefits and $850 million on closing stores and exiting leases.
The stores marked for closure either lack a path to financial viability or do not meet the physical environment Starbucks is looking for. The company aims to create a “warm and welcoming” atmosphere in every store, including the addition of more comfortable chairs and additional outlets.
Employees in stores set to be closed will be notified this week and may be able to transfer their role to a nearby location, Niccol’s message said.
Niccol took charge at Starbucks around one year ago with a reputation as a turnaround specialist. He helped Chipotle drastically boost its revenue and profits as the company’s chief executive for six years until 2024. Before Chipotle, he served as chief executive at Taco Bell.
In Starbucks’ latest earnings report, the company saw a 2% decrease in North American comparable store sales and a 2% increase in net revenues.
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