Starbucks to close stores and lay off hundreds of staff in $1 billion restructure

Starbucks announced Thursday that it will close some underperforming company-owned stores in North America and eliminate about 900 corporate roles as part of a sweeping $1 billion restructuring plan.

In a message to employees, CEO Brian Niccol said the company had reviewed its coffeehouse portfolio and identified locations “unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance.”

About 1 percent of Starbucks’ North American stores will be notified of their closures this week, Niccol said. Employees at those locations will be eligible to transfer to nearby stores.

Meanwhile, many open or vacant non-retail positions will also be eliminated.

“Our coffeehouses are centers of the community, and closing any location is difficult,” Niccol wrote.

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Despite some store closures, Starbucks aims to finish the year with about 18,300 locations in the U.S. and Canada, including both company‑operated and licensed locations.

The job cuts will primarily hit Starbucks’ support and corporate staffing functions, not the baristas and operations staff in stores.

Employees affected by the job cuts will be notified Friday morning.

“Unless your job specifically requires you to be on site in the office, we’re asking you to work from home today and tomorrow,” Niccol said in Thursday’s memo.

Niccol said the company expects to spend around $1 billion on “generous” severance packages, lease terminations, and other expenses related to the store closures.

“As we build toward a better Starbucks, we’re investing in green apron partner hours, more partners in stores, exceptional customer service, elevated coffeehouse designs, and innovation to create the future,” he explained. “We will continue to carefully manage costs and stay focused on the key areas that drive long-term growth.”

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Starbucks is aiming to revive its business by improving café performance and streamlining operations, while managing rising labor and coffee costs after six quarters of declining same-store sales.

The recent announcement also follow an earlier round of about 1,100 corporate layoffs earlier this year.

Starbucks shares were little changed in premarket trading, and the stock is down about 7.7 percent over the course of the year.