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Starbucks has announced its decision to cut 900 corporate jobs and close a number of underperforming stores in North America as part of a $1 billion restructuring effort. The closures are expected to reduce the overall store count in the region by approximately 1% by the fiscal year-end. CEO Brian Niccol emphasized that the company’s review revealed certain locations were unable to meet financial performance targets or provide the customer experience expected of the brand. Employees affected by these changes will be offered severance support, including benefits extensions.
The company plans to channel the savings from layoffs and closures into improving store designs and enhancing customer experiences. Starbucks aims to invest in 1,000 locations over the next 12 months, focusing on creating cozier and more welcoming coffeehouse environments, moving away from a pickup-centric model. Additionally, the company is set to execute targeted renovations, allocating approximately $150,000 per location, while simultaneously reducing new store build costs by up to 30%. These efforts include introducing a new stand-alone store prototype with enhanced seating and drive-through capabilities by fiscal 2026.
Starbucks continues to face significant challenges, including six consecutive quarters of declining same-store sales. In the most recent quarter, same-store sales dropped by 2%, driven by a 4% decline in comparable transactions. Analysts attribute this trend to inflationary pressures affecting consumer spending. CEO Niccol, who joined Starbucks a year ago, is leveraging his turnaround expertise to reposition the brand. Under his leadership, the company is reassessing its store portfolio and implementing strategic initiatives to drive long-term growth while addressing immediate financial hurdles.
