(NEXSTAR) — Starbucks announced Thursday that it plans to close hundreds of stores in the coming days as it continues to focus on its “Back to Starbucks” plan.
CEO Brian Niccol said in a letter shared Thursday that the number of company-operated Starbucks locations in North America “will decline by about 1% in fiscal year 2025.” That does, however, account for both the “numerous coffeehouses” that Starbucks has opened this year as well as other closures that have taken place in the last 12 months.
As of late June, Starbucks had 18,734 locations across North America, according to the Associated Press. When the fiscal year ends in a few days, Starbucks said it expects to have 18,300 stores across the continent.
When will the closures happen?
At least one notable closure has already happened: the Reserve Roastery location on Pike Place in Seattle. A letter posted on the door of the Pike Place location — a popular tourist attraction thanks to its unique menu and its design, which is unlike a typical Starbucks — confirmed the location’s closure. It, as well as the Reserve Roastery within the company’s Seattle headquarters, has been marked as closed online.
The Reserve Roastery locations in Chicago and New York are marked as open as of Thursday morning.
With the fiscal year ending this weekend, closing stores are expected to remain open only for a few more days.
Which stores will close?
Niccol did not say which stores, in particular, would be shuttering, but called the decision to close some locations and lay off 900 nonretail employees “necessary to build a better, stronger, and more resilient Starbucks.”
Workers at other Starbucks locations have reported online that they weren’t aware their store was closing until they showed up for their shifts Thursday morning or received a call from management.
Reddit users who identified themselves as baristas at Starbucks locations in New York City, San Diego, and Utah are among those who revealed Thursday that they had been notified of their stores’ closures.
Niccol explained that closing stores were identified during a review of coffeehouses.
“During the review, we identified coffeehouses where we’re unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance, and these locations will be closed.”
Business Insider reports the Pike Place store was among the first to unionize and has served as a place of protest, with demonstrators gathering as recently as Monday to call for a completed labor contract. Starbucks, however, denied that union status was considered with these closures, the outlet reported. Workers at 650 company-owned U.S. Starbucks stores have voted to unionize since 2021, but they have yet to reach a contract agreement with the company.
Which Starbucks locations are expected to remain open?
While Starbucks didn’t specify which stores would close, certain subsets of stores will not be impacted by the closures. That includes locations found in retailers like Target and King Soopers — these are considered licensed locations — and any that have been “uplifted” already this year
If your coffeehouse does not already have a sign warning of its impending closure, or hasn’t shut its doors already, you’ll likely be able to confirm that it’s remaining open in the Starbucks app on Sunday, when the fiscal year ends.
Starbucks said it expects to spend $1 billion on the restructuring, including $150 million on employee separation benefits and $850 million related to the physical store closing costs, and the cost of exiting leases.
Niccol: Growth expected in next fiscal year
While dozens of stores are set to close in the coming days, Niccol said Thursday that in the next fiscal year, “we’ll grow the number of coffeehouses we operate as we continue to invest in our business.” More than 1,000 locations are also on track to be updated “to introduce greater texture, warmth, and layered design.”
“These steps are to reinforce what we see is working and prioritize our resources against them,” Niccol said. “Early results from coffeehouse uplifts show customers visiting more often, staying longer, and sharing positive feedback. Where we’ve invested in more green apron partner hours so that there are more partners working at busy times, we saw improvements in transactions, sales, and service times, alongside happier, more engaged partners.”
This is the second big round of layoffs at Starbucks this year. In February, Niccol announced the layoffs of 1,100 corporate employees globally and eliminated several hundred open positions. At the time, Niccol said Starbucks needed to operate more efficiently and increase accountability for decisions.
In July, Starbucks reported its sixth straight quarter of lower same-store sales, as weak U.S. traffic continued to be a drain on the company. Niccol is trying to turn that around by adding staff, making stores cozier and introducing software that helps prioritize orders and make sure customers can get their drink within four minutes.
The Associated Press contributed to this report.
Source: Fox 8 News Channel
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