TLDR
- Starbucks is cutting 900 corporate jobs and closing unprofitable stores as part of a $1 billion restructuring effort
- The company will reduce its North American store count by roughly 1% this fiscal year, closing locations that can’t meet performance standards
- CEO Brian Niccol plans to invest savings into customer service staff and store renovations to improve the coffeehouse experience
- This follows earlier layoffs of 1,100 employees and comes after six straight quarters of declining US same-store sales
- Corporate employees must now work in the office four days a week starting September 30
Starbucks announced another round of job cuts Thursday as CEO Brian Niccol continues his turnaround efforts at the struggling coffee chain. The company will eliminate 900 non-retail positions and close underperforming locations as part of a $1 billion restructuring plan.
The cuts come just months after Starbucks laid off 1,100 employees earlier this year. Affected workers will receive severance packages and extended benefits, according to a company memo sent to employees.
Niccol told staff that notifications will go out Friday, September 26. The CEO said the company will “carefully manage costs and stay focused on the key areas that drive long-term growth.”
The restructuring also includes closing some coffeehouses across North America. Starbucks plans to reduce its store count by roughly 1% in the US and Canada this fiscal year through a combination of closures and new openings.
By year-end, the company expects to operate nearly 18,300 locations across both countries. This compares to 18,842 North American locations as of the third quarter.
Store Portfolio Under Review
Niccol identified specific criteria for store closures in his employee letter. The company will shut down locations where it cannot create the expected customer environment or achieve acceptable financial performance.
“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,” Niccol wrote.
The closures come as Starbucks faces continued sales pressure. The company reported its sixth consecutive quarterly drop in US same-store sales in its latest results.
US same-store sales fell 2% in the most recent quarter. The decline matched the previous quarter’s performance but beat analyst expectations of a 2.5% drop.
Comparable transactions fell 4% during the period. Wall Street had predicted a steeper 4.5% decline.
Investment in Remaining Locations
Despite the closures, Starbucks plans to invest heavily in its remaining stores. The company will spend money on 1,000 locations over the next 12 months to enhance the coffeehouse atmosphere.
Niccol wants to move away from pick-up-focused experiences and return to a cozier environment. The company removed thousands of chairs from stores in recent years but now plans to bring them back.
Store renovations will cost approximately $150,000 per location. These targeted improvements aim to create a more welcoming space for customers who want to stay and work.
The company is also developing new store prototypes. A new stand-alone design launching in fiscal 2026 will feature 32 seats and a drive-through option.
Starbucks managed to cut construction costs for new locations by roughly 30%. This cost reduction should help the company expand more efficiently in profitable markets.
Corporate employees face new workplace requirements under the restructuring. Starting September 30, office workers must be in the office four days per week.
The policy change affects corporate employees, support staff, and managers. Niccol announced this requirement back in July as part of his broader organizational changes.
September 9 marked Niccol’s first full year as CEO. He took over during a challenging period for the coffee chain and has focused on operational improvements and cost management.
The company plans to use savings from job cuts to hire more customer service employees in stores. This shift reflects Niccol’s emphasis on improving the in-store experience for customers.
