Starbucks announced a significant restructuring plan, including the closure of hundreds of stores in the U.S., Canada, and Europe, along with the layoff of 900 non-retail employees. This move is part of the company's "Back to Starbucks" strategy, which aims to revitalize coffeehouses and enhance the customer experience. The company stated that stores being closed either lack a viable path to offering the expected physical environment or a clear path to financial performance.
The restructuring is expected to cost Starbucks approximately $1 billion. This includes $150 million for employee separation benefits and $850 million related to the physical stores, such as asset impairment and lease exit costs. A significant portion of these expenses, about 90%, is attributed to the North American business, with the majority of store closures anticipated to be completed by the end of the current fiscal year.
While Starbucks did not provide an exact number for store closures, analyst Andrew Charles of TD Cowen estimated around 500 North American stores would close in the fiscal fourth quarter. The company expects its North American locations to number approximately 18,300 by the fiscal year-end, down from 18,734 as of June 29. The overall company-operated store count in North America is projected to decline by about 1% in fiscal year 2025, accounting for both openings and closures.
Baristas affected by the store closures will be offered severance packages and transfers to other nearby locations where possible. Starbucks Workers United, representing 12,000 baristas, announced its intention to formally address the company regarding the closures. Following the announcement, Starbucks shares were down less than 1%, having already fallen more than 8% for the year.
