Abstract:
Starbucks plans to close about 250 underperforming coffee shops in North America this week. This is the latest move by CEO Brian Nicol to promote changes in business operations. This is the second round of store closures since Nicol took over. Nicole joins the coffee giant in September 2024.
Starbucks plans to close about 250 underperforming coffee shops in North America this week. A poorly run coffee shop needs to streamline its business and improve its operational profitability.
Starbucks’ current financial quarter will end at the end of this month, and last year’s corporate restructuring and layoff announcement was also released at about the same time.
Starbucks said the store closures will incur restructuring charges of approximately US$300 million. Nicholl previously set a goal of cutting $2 billion in costs by the end of fiscal 2028.
Starbucks Chief Operating Officer Mike Grams wrote in an email to all employees: "Despite the hard work of all colleagues, there are still some coffee shops that continue to perform below expectations." The company said it will try its best to place baristas in closed stores; severance compensation will be paid to employees who choose to leave.
Last year, Starbucks spent several months reviewing thousands of stores across the United States, closing hundreds of stores that failed to achieve expected profits and had substandard customer experience, while cutting retail jobs.
When talking about store profit evaluation and store closure decisions in July, Nicole said: "This is just a routine business health review."
Starbucks official data shows that as of the end of June, the number of Starbucks directly-operated stores in North America was 11,149, a decrease of approximately 300 stores compared with the same period last year.
Starbucks said that its short-term store expansion will focus on markets outside North America.
The company is developing new, smaller store types and plans to launch them in the United States to cope with the competition from fast-rising tea chain brands such as BROS. Starbucks is also renovating hundreds of existing stores across the United States.
Nicol also vigorously streamlined the headquarter staff size. Starbucks previously laid off about 2,000 headquarters employees and eliminated hundreds of unfilled positions.
In August this year, Starbucks announced that it would lay off more than 200 employees, including employees in the coffee shop design and development and technology departments - these employees refused to move to the new headquarters in Nashville, Tennessee. Earlier this year, Starbucks laid off hundreds of headquarters employees again and closed regional headquarters offices in Chicago, Atlanta, Dallas, and Burbank, California.
Earlier this week, Starbucks announced that it will set up a new technology office in India and will conduct local recruitment in the southern city of Chennai.
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