New York
Starbucks is set to close approximately 250 locations as part of its ongoing store count reduction efforts during a turnaround phase.
The company stated that the closures involve locations that did not “deliver the experience we want for customers and partners” or are financially unviable. This accounts for about 1% of Starbucks’ North American footprint, which has around 18,000 locations.
CEO Brian Niccol previously announced a similar number of closures last year, along with corporate layoffs, as part of a $1 billion restructuring initiative. He is leading a long-term strategy to revitalize the business and stimulate growth. Recent improvements in North America include café renovations, enhanced service, and a simplified menu.
Starbucks anticipates incurring around $300 million in expenses due to the closures, according to a regulatory filing. This includes $200 million from early lease terminations and employee severance packages.
A list of affected locations has not yet been disclosed. Customers can expect to notice signage at impacted cafés this weekend, and the changes will also be updated in the app.
“We are optimistic about the substantial long-term growth opportunities in North America,” COO Mike Grams expressed in a letter to employees, emphasizing the company’s commitment to expanding its network of coffeehouses.
Nevertheless, the company anticipates opening only about 440 new locations worldwide this fiscal year, a decrease from the previously projected 600 to 650 openings.
Starbucks’ sales have shown a resurgence, with same-store sales in US locations increasing by 6% in the latest quarter. Niccol noted in the July earnings report that “this was the quarter our momentum became truly measurable.”
