Starbucks Lays Out $1 Billion Restructure Plan Amid Store Closures

Starbucks is to slow expansion and close underperforming stores. (Photo by Justin Sullivan/Getty Images)

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Starbucks is embarking on a sweeping $1 billion restructuring effort aimed at reshaping its North American operations.

But the move is set to shutter hundreds of the company’s ubiquitous coffeehouses and cut hundreds of corporate jobs as the company seeks to reignite growth in its largest market.

In a regulatory filing Thursday, the Seattle-based coffee giant said it plans to trim its portfolio of company-operated cafés in the U.S. and Canada by roughly 1% during fiscal 2025, a net change that reflects both store openings and closures.

That equates to about 500 store closures across the region and Starbucks expects to end the fiscal year with about 18,300 locations, including licensed stores, before the company gets back on the expansion trail in 2026.

The closures will target underperforming cafés or locations where remodeling to meet customer expectations is not financially viable. Workers at affected stores will be offered transfers to nearby outlets where possible, or severance pay if relocation is not an option.

Starbucks Slows Cafe Expansion

Starbucks has already slowed new store openings this year in favor of remodeling existing locations, aiming to restore Starbucks’ reputation as a welcoming third place between home and work.

And the cost of the reset will be steep. The company projects that it will have to find about $1 billion in total restructuring charges, with roughly 90% tied to its North American business. About $150 million will cover employee separation expenses, while approximately $850 million will be set aside for the closures and related restructuring costs. A significant portion of those charges are expected to hit the books in fiscal 2025.

The plan also includes layoffs affecting roughly 900 non-retail employees, set to take effect Friday and that will mark the second round of job cuts since CEO Brian Niccol took the helm in 2024. Earlier this year, the company cut out about 1,100 corporate positions and Starbucks ended 2024 with approximately 16,000 employees working outside its retail stores.

Niccol described the initiative, part of a wider revamp he has dubbed Back to Starbucks, as a way to refocus investment on stores and the customer experience after six consecutive quarters of declining same-store sales.

“These steps are necessary to build a stronger, more resilient Starbucks that creates more opportunities for our partners, suppliers and the communities we serve,” he wrote in a letter to employees.

Starbucks Looks To Revamp Operations

Starbucks Workers United, the union representing about 12,000 baristas at more than 650 U.S. stores, said that it plans to seek formal bargaining over the impact of the closures.

Niccol has also rolled out operational changes, including a return-to-office policy of four days a week for corporate staff and the addition of key executives he previously worked with during his time with Chipotle and Yum Brands.

Thursday’s announcement followed a summer pledge to invest more than $500 million in additional labor hours across company-owned cafés under its Green Apron Service initiative, designed to improve service quality.

Starbucks shares remained largely unchanged and dipped around 1% in trading following the news but remain down more than 8% year-to-date. Niccol expressed confidence in the long-term payoff of the overhaul, saying he hopes to steer Starbucks toward becoming “the world’s greatest customer-centric company.”