Starbucks is closing stores and trimming 900 jobs as part of a $1-billion restructuring under CEO Brian Niccol. The move comes after six straight quarters of declining same-store sales, as the company tries to reset its strategy.
Fewer stores, but more inviting spaces
The coffee chain will cut its US and Canada store count by about 1%, dropping to 18,300 outlets. After that, it plans to expand again and revamp another 1,000 cafes. Niccol’s focus is on making Starbucks locations more welcoming by adding seating and electrical outlets to encourage customers to linger.
Struggling for profitability
A review of outlets flagged several that couldn’t turn a profit, leading to closures. Some of the affected sites include small pickup-only stores built for mobile orders. Others will be converted into full-service cafes, as Starbucks moves away from that format.
Customer response to changes
Niccol said early results from revamped stores show customers staying longer, visiting more often, and offering positive feedback. Still, analysts argue the bigger problem—Starbucks’ high prices—remains unaddressed.
Financial pressures mount
The restructuring is Starbucks’ second round of job cuts under Niccol. Shares were little changed in pre-market trading, though the stock is down 8% this year, compared with a 13% rise in the S&P 500. Profitability also slipped last quarter due to investments in store upgrades.
Menu revamp to cut wait times
To reduce complexity and speed up service, Starbucks is trimming its menu while adding new options that align with changing tastes. Sugar-free drinks and protein-infused beverages have been introduced as demand grows for healthier choices.
Rising competition in key markets
Starbucks faces pressure in both the US and China, where smaller rivals are luring customers with cheaper drinks served faster. Analysts say Niccol’s long-term vision of rebuilding Starbucks as a “third place” for customers will take time and may face more setbacks.
