Starbucks to Close Hundreds of Stores and Cut Thousands of Jobs in a $1bn Austerity Plan
Starbucks is preparing to write off $1bn in costs and assets by closing hundreds of stores in North America and making further corporate layoffs.
Between June and the end of September, 400 US and Canada stores deemed unprofitable and unsuitable for refurbishment were closed or slated for closure. US store managers will find out this week if their outlet has been added to the list, extending cuts that have so far focused on takeaway-only stores.
However, in an open letter to employees, Starbucks CEO Brian Niccol announced that hundreds more sit-in stores deemed unsuitable for refurbishment under the Back to Starbucks strategy would also close. Starbucks has sought to move away from “overly transactional” takeaway stores and focus on longer dwell-time visits and more personalised service as part of a major strategy to reverse faltering sales in the US.
“We have 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,” Niccol said in his letter.
Niccol forecasts that Starbucks will end its fiscal year with nearly 18,300 company-operated and licensed stores across North America, down from 18,734 at the end of its third quarter ended 30 June 2025. The Seattle-based coffee chain, which has posted six consecutive quarters of like-for-like sales decline in the US, plans to return to positive outlet growth across North America next year, as well as modernise more than 1,000 US stores — 10% of its company-owned US locations.
Niccol has also announced further layoffs, just seven months after announcing plans to cut 1,100 corporate jobs across its global business. Approximately 900 non-retail roles will be axed as the coffee chain seeks to prioritise investment in retail operations.
“These steps are to reinforce what we see is working and prioritise our resources against them. We will continue to carefully manage costs and stay focused on the key areas that drive long-term growth,” Niccol added.
In a separate SEC filing, Starbucks said $450m of the total $1bn costs will be allocated to exiting leases early, with a further $400m on the disposal of company-operated store assets. The remaining $150m will be allocated to severance and staff support packages.
In July 2025, Starbucks reported 2% year-on-year net revenue growth in North America to reach $6.9bn. However, the coffee chain saw third quarter like-for-like sales and comparable transactions both declined.
