New York: Starbucks is pulling back from its once-relentless expansion strategy, announcing it will close about 1 per cent of its North American stores — roughly 400 locations — as part of a sweeping $1 billion restructuring plan.
According to the Associated Press, the move comes alongside layoffs of 900 corporate employees.
The coffee giant has long been known for its ubiquitous presence in cities and suburbs.
What is driving the closures?
The change reflects broader pressures facing the company, including inflation, growing competition, and evolving customer behaviour, according to CNN.
“These stores weren’t what our customers and partners expect,” said Starbucks CEO Brian Niccol, citing underperformance and lack of profitability.
While the closures represent only a fraction of Starbucks’ more than 32,000 global locations, analysts say the decision signals a deeper challenge. According to RJ Hottovy of foot-traffic analytics firm Placer.ai, many of the affected stores are in urban centres that have seen declining business since the COVID-19 pandemic pushed people to relocate.
Starbucks is also feeling pressure from emerging competitors like Blank Street Coffee, Blue Bottle, and Dutch Bros, along with independent coffee shops gaining popularity.
A UBS survey cited by CNN found over 70 per cent of respondents planned to visit Starbucks less due to rising prices, with lower-income customers most affected.
Revival efforts
Niccol, who joined Starbucks as CEO in September 2024 after successful stints at Chipotle and Taco Bell, is leading a broad turnaround effort to revive the brand. That includes returning to the concept of Starbucks as a “third place” between home and work — a hallmark of its earlier success.
Under Niccol’s leadership, Starbucks has reintroduced barista doodles on cups, reinstated self-serve milk and sugar stations, and significantly pared down its menu.
The company has also reversed its open-bathroom policy for non-paying customers and cut over 2,000 corporate jobs this year.
To rekindle in-store visits, Starbucks plans to renovate 1,000 US stores with comfortable seating, tables, and power outlets — about 10 per cent of its company-owned US locations — within the next year, and aims to revamp all domestic stores within three years.
