Starbucks is closing its locations. Closing more than 100 and terminating employees. placing audacious wagers. If you frequently visit Starbucks, you may have noticed a change. The company is implementing a comprehensive plan to revitalize its brand under the leadership of new CEO Brian Niccol. But why shut down shops? What is the reasoning behind this action? What does it signify for you as the client (and devoted coffee drinker)?
The Big Picture | What’s Going On at Starbucks
- Leadership change: Brian Niccol became Starbucks CEO in September 2024. He came from leading turnaround stories like Chipotle.
- “Back to Starbucks” strategy: He plans to bring Starbucks back to being a warm, welcoming coffeehouse, a “third place” beyond home and work. Less about speed + transactional convenience, more about atmosphere, experience, quality.
- Trouble that prompted change: Same-store sales have been shrinking in the U.S. for several quarters. Customers were drifting away. Competition increased. Some stores and formats (like pick-up-only shops) didn’t deliver what Starbucks wants now.
What Parts of the Strategy Will Hit You Most
Here are the key moves that tie into the closures:
- Store experience upgrade: Niccol is pushing for more inviting designs, comfortable seating, and bringing back elements removed earlier (e.g., seats, condiment bars). He wants texture, warmth, layered design.
- Menu simplification & speed expectations: The menu will be trimmed. Less complexity means faster service, more consistency. Also, the company is pushing for certain service time standards.
- Support and corporate overhead cuts: Non-retail roles (people who work not in cafés but in corporate, support, etc.) are being reduced significantly. Open positions are being closed.
Why Store Closures?
- You might wonder: Why close Starbucks stores rather than just revamping everything? Here are the strategic reasons:
- Underperforming locations: Some stores just aren’t pulling their weight. Either their sales are weak, or their setup (layout, lease, design) makes it hard to deliver the experience Starbucks is aiming for.
- Physical environment constraints: In certain stores, Starbucks says it cannot create the kind of environment it expects customers and workers to have. Some spaces are too small, or have lease issues, or cannot be upgraded to new design standards.
- Resource reallocation: By closing weaker stores, Starbucks frees up money, staff, and attention to invest in the better-performing ones. Upgrades, improved service, better seating, etc. The idea is: rather than trying to fix every weak link, double down on what’s working.
- Efficiency & cost savings: Store closures involve costs (lease buy-outs, asset write-offs), but over time, they reduce ongoing losses. Also, corporate overhead is expensive. Cutting non-retail employees, closing open positions helps reduce fixed costs.
How Big Is This Move? What Is Starbucks Doing Exactly?
Here’s how the plan is unfolding in real numbers and actions:
1% net decrease in North American store count:
Despite opening some new stores, Starbucks expects a net drop in company-operated U.S. & Canadian stores by roughly 1% in fiscal year 2025.
$1 billion restructuring cost:
All in, Starbucks will spend about $1 billion to carry out these changes. That includes store closure costs (breaking leases, assets), severance for corporate/support roles, etc.
Layoffs of non-retail roles:
About 900 non-store (support / corporate) staff will be cut. Also, many open (unfilled) positions will be closed.
Targeted stores to close/convert:
Pickup-only / mobile-order-only stores, some will shut, some will convert into full coffeehouses. Flagship or iconic locations (e.g. certain Reserve stores, including in Seattle) are not spared in some cases.
Upgrades/refreshes:
Over 1,000 stores will get design “uplifts” to align with the new vision. Better seating, ambiance, comfort.
Early Signs & Mixed Results
Not everything is clear yet. Some early signals show promise, others suggest challenges ahead.
Positive indicators:
Some upgraded stores show customers are coming back more often and staying longer.
Employee culture shifts:
Initiatives like putting seats back, bringing back small touches customers liked. These moves are appreciated by parts of Starbucks’ workforce and customers.
Challenges & warning signs:
Same-store sales are still down in many quarters. It’s one thing to change design or culture; another to reverse strong headwinds like inflation, cost of living, and customer spending behavior.
Public backlash or employee dissatisfaction:
Store closures can hurt morale, communities; sudden closures can feel disruptive. Transparency helps, but there are concerns.
Competitive pressures remain intense:
Cheaper alternatives, local cafés, convenience, home coffee, these all eat into Starbucks’ margin.
Risks & Stakeholder Impacts
When a large chain starts closing stores, the ripple effects are real. Here’s what’s at stake:
- Employees / Partners: For store staff, some will be relocated; others may lose jobs. For corporate staff, support roles are being cut. Affected workers need good severance, clear communication.
- Customers / neighborhoods: If your nearest Starbucks is one that might close, you’ll lose convenience. Also, community identity tied to stores (especially older ones or union-recognized ones) may be affected.
- Brand image: Starbucks wants people to think “more cozy, more human, better experience.” But if closures are too sudden or poorly handled, people might instead think “losing ground, cutting corners.”
- Financial exposure: The restructuring isn’t free. Lease buyouts, asset losses, severance, these are big costs. If the changes don’t yield improved sales or margins, there’s risk.
What Comes Next? Possible Scenarios & What to Watch
If you follow this story (or have a favorite Starbucks near you), here are things to observe and possible future paths:
Metrics to watch
- Same-store sales growth or recovery;
- Traffic in upgraded stores;
- Customer satisfaction / dwell time (how long people stay in cafés).
- Cost savings vs. restructuring costs and how fast they pay off.
Scenario possibilities
- Smooth turnaround – Closures + upgrades + service improvements produce stronger financials, renewed customer loyalty. Starbucks stabilizes, then possibly resumes modest growth.
- Gradual recovery with bumps – Some stores succeed, others continue to struggle; change takes time. Starbucks may need to revise or extend its strategy.
- More aggressive trimming – If sales remain weak, further closures or deeper cuts in costs could follow.
Potential shifts in formats
- More hybrid cafés (drive-thru + seating).
- Some pickup-only stores converted.
- New prototypes (cheaper to build, but offering a better experience) might spread.
Lessons Other Brands Can Learn
These moves by Starbucks under Niccol show lessons that many companies (especially big ones) can take to heart:
- Sometimes less is more: Not every location or format serves the brand’s core promise. It can be better to close weak spots and invest in strengths.
- Culture & experience matter, not just product/services. Customers care about ambiance, consistency, and feeling welcome.
- Transparency and care with stakeholders matter, employees, the local community, and customers. Sudden closures or abrupt changes can damage trust.
- Long-term thinking over short-term gains: Restructuring costs up front are painful, but the payoff depends on executing well over time.
Under Brian Niccol, Starbucks isn’t just retreating. It’s adjusting. Closing stores is a key component of a bigger reset that involves investing in what works and cutting back on what doesn’t. Restoring Starbucks as a destination for people to hang out rather than just stop by for a quick drink is the aim.
If this approach is successful, only time will tell. However, the stakes are high for the brand itself, as well as for neighborhoods, customers, and employees. It’s worthwhile to monitor whether the Starbucks in your area is one of the ones that gets renovated or shut down. In any case, this is among the most significant changes Starbucks has made in a long time.
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