As Starbucks faces ongoing challenges, the company announced it’s closing over 400 underperforming stores across North America. This move is part of a larger restructuring plan aimed at improving store efficiency and enhancing the customer experience. The decision comes after a review revealed that many stores weren’t meeting financial expectations or physical environment standards for customers and employees.
Alongside the store closures, Starbucks will also cut roughly 900 non-retail corporate positions. This eliminates many jobs within the company’s support and corporate roles. The restructuring will cost Starbucks around $1 billion and includes a significant portion for employee severance expenses. Starbucks will retain nearly 18,300 stores in the U.S. and Canada by the end of the fiscal year, despite these closures.
Starbucks is cutting approximately 900 corporate positions in a $1 billion restructuring plan while maintaining 18,300 stores across North America.
The closures are focused on stores that have struggled financially and do not have a clear path to recovery. Starbucks found that some locations heavily reliant on mobile ordering and pickup were, ironically, not meeting the transactional needs of customers. Hence, the need for changes became evident.
Starbucks is aiming to refocus its efforts on enhancing store experiences that align closely with what customers want. These actions, while tough, are seen as essential to reviving the brand’s perception in a competitive coffee market. The company acknowledges that it needs to build a stronger Starbucks that can better interact with its community and partners.
However, the closures and job cuts raise questions about the future direction of the company. Starbucks has experienced six consecutive quarters of decreasing same-store sales, adding pressure to make changes.
Investors have shown mixed feelings, with stock movement indicating cautious optimism following the announcements. The restructuring signals a significant effort to recapture growth and reduce losses amid a changing market landscape. Whether these actions will lead to a turnaround remains to be seen as the coffee giant navigates this challenging period.
