In a bold bid to right its course, Starbucks – sometimes playfully referred to in online chatter as “Startbucks” – is moving to lay off about 900 non‑retail employees and shutter underperforming stores across the U.S. and Canada.
The Seattle coffee giant says it is refocusing its resources toward a sharper turnaround strategy as it bets on relaunching its stores’ appeal and stabilizing its financial footing.
According to a letter from CEO Brian Niccol, a thorough review of its Starbucks store portfolio revealed that a number of locations are failing to meet financial performance benchmarks or failing to deliver the customer experience the company expects. Niccol wrote: “Each year, we open and close coffeehouses …
This is a more significant action … closing any location is difficult.” The company expects its North American footprint to decline to roughly 18,300 stores by the end of the fiscal year, down 124 from the previous year.
Why Now and What’s at Stake?
Under Niccol’s leadership, appointed a year ago as CEO and known as a turnaround specialist (notably from his prior role at Chipotle), Starbucks has sought to reenergize its operations.
But the company has faced a slide in same‑store traffic and stiff competition from lower‑cost rivals, especially in the U.S.
The cuts to non‑retail staff and the pruning of underperforming Starbucks stores are part of a $1 billion restructuring initiative.
Niccol says the job cuts will primarily affect support and management roles, and Starbucks will extend severance and support packages.
The company has also been closing or eliminating unfilled roles as part of the effort to flatten organizational layers.
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The Impact on Starbucks Stock and Investor Sentiment
The market is watching closely. Starbucks stock (ticker SBUX) has been under pressure this year, slipping amid investor doubts about the effectiveness of the turnaround.
Still, there have been glimmers of cautious optimism: when Niccol’s “Back to Starbucks” plan showed signs of progress earlier in the year, the stock rose about 4 % in after-hours trading.
Many analysts now view the cuts and store rationalizations as necessary steps to preserve margins and free up capital for reinvestment.
However, if same‑store traffic and consumer demand don’t rebound, the cuts may not be sufficient. Some analysts caution that more time and patience will be required before investors see concrete returns.
What This Means for Starbucks Store Strategy
The decision to shrink the Starbucks store count during a fiscal year is rare and emphasizes how deeply the company views reform as urgent.
Notably, the closures apply to company‑operated Starbucks stores, and do not extend to licensed locations. Starbucks says the closures will mostly hit venues that can’t be brought up to its standards or that don’t show a path to sustainable profitability.
Meanwhile, Niccol is emphasizing improvements in store experience: reducing wait times, restoring seating and ambiance, and rolling out design “uplifts” to better reflect the coffeehouse identity Starbucks once championed.
The company has also signaled plans to renovate more than 1,000 stores in the coming period.
As Starbucks moves decisively to streamline support operations and close underperforming sites, all eyes will be on whether the company can rebuild momentum in its U.S. home market and whether Starbucks stock will recover in tandem.
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