The Reason Starbucks Plans To Close Down Over 100 Stores This Year

Starbucks announced today that it is implementing a $1 billion restructuring plan, with intentions to close over 100 cafes. The company anticipates laying off approximately 900 non-retail employees tomorrow. In a letter to employees, Starbucks CEO Brian Niccol explained the store closures this way: "We identified coffeehouses where we're unable to create the physical environment our customers and partners expect, or where we don't see a path to financial performance, and these locations will be closed." Not all employees at shuttered locations will be losing their jobs, however; some will be transferred to alternate locations.

This will bring the total number of corporate-operated stores down by about 1% this fiscal year, after also accounting for new openings. It also marks the second round of layoffs in 2025, as Starbucks laid off 1,100 corporate employees earlier in the year. As you can imagine, the cafe giant hasn't been doing too well in terms of sales. Same-store sales have slipped six quarters in a row, thanks to price-conscious shoppers and Starbucks' competition from businesses like Dutch Bros and Dunkin'. Unionization protests and boycotts from pro-Palestine groups also appear to be affecting sales and the public's perception of the coffee chain.

Just earlier this year, Starbucks announced that it had made its biggest investment into labor and operating standards yet, dubbing it the "Green Apron Service." This $500 million investment was meant to turn Starbucks into more of a destination visit rather than a utility one, hoping that improved customer interactions would keep people coming back routinely and perhaps spending more money overall. In addition to attention to hospitality, the plan also focuses on revamping staffing, scheduling, and technology — all to hopefully improve service and quality.

Starbucks anticipates that its profits will improve by 2027, which seems a long way out, but it takes time for turnarounds to happen at chains as large as this one. With the gas station and convenience store coffee game stepping up quite a bit (not to mention, you can get hot food at many now), along with up-and-coming chains like 7 Brew, Scooters, and more, Starbucks likely has a rougher path in front of it for a while. I'd anticipate some continued operational changes at the cafe in the near future, but I have a feeling that the pumpkin spice latte isn't going anywhere anytime soon.