AT A GLANCE
- Starbucks is closing hundreds of stores in the U.S., Canada, and Europe.
- 900 nonretail employees are being laid off as part of restructuring.
- The company expects to end its fiscal year with 124 fewer North American stores.
- Starbucks will spend $1 billion on restructuring, including $150 million in separation benefits.
Starbucks Launches Major Restructuring Effort
Starbucks is shuttering hundreds of stores across North America and Europe while cutting 900 nonretail jobs, the company confirmed Thursday. The closures, part of a billion-dollar turnaround strategy, will reduce Starbucks’ footprint to 18,300 stores in North America by the end of its fiscal year, down from 18,734 in June.
Analysts estimate roughly 500 North American stores will close in the fourth quarter alone. CEO Brian Niccol said the decision followed a sweeping review of underperforming locations where profitability or customer experience couldn’t be sustained.
Employees Face Layoffs and Store Transfers
Starbucks said affected baristas will be offered transfers or severance packages, while nonretail workers will be notified of eliminations Friday. The company set aside $150 million for separation benefits and $850 million to cover lease exits and physical closures.
Niccol, in a letter to European employees, confirmed closures would also extend to stores in the U.K., Austria, and Switzerland.
Union Tensions and Worker Backlash
The move comes as Starbucks faces ongoing clashes with unionized workers. Since 2021, staff at more than 650 U.S. stores have voted to unionize but remain without a contract. Starbucks Workers United criticized the closures, saying decisions were made without input from employees and vowed to push for placement rights at impacted locations.
The announcement also follows lawsuits from baristas over the company’s dress code policy, adding another layer of worker frustration.
Starbucks Looks Ahead Despite Sales Slump
Despite shrinking its store count for the first time in years, Starbucks says growth is on the horizon. The company plans to redesign 1,000 stores in the next year with warmer, more welcoming interiors and is committed to expanding its North American presence in the coming fiscal year.
This marks Starbucks’ second round of layoffs in 2025. In February, Niccol slashed 1,100 corporate jobs, citing the need for efficiency and accountability. Now, as Starbucks battles six straight quarters of declining U.S. traffic, Niccol is banking on cozier stores, added staff, and faster order processing software to win back customers.
