Starbucks to close stores, lay off workers in $1 billion restructuring

Starbucks announced a $1 billion restructuring plan Thursday that involves closing some of its North American coffeehouses and laying off more workers as it moves ahead with its “Back to Starbucks” transformation under CEO Brian Niccol.

The number of company-operated stores in North America will decline by about 1% in fiscal year 2025, accounting for both openings and closures, and more than 900 employees will be laid off, the company said in an SEC filing.

Starbucks estimates that 90% of the expected $1 billion restructuring cost will be attributable to the North America business. A significant portion of expenses will be incurred in fiscal year 2025, it said.

Starbucks said in the filing it is prioritizing investment “closer to the coffeehouse and the customer” as it looks to reverse a sales slump in its biggest market.

This is the second round of layoffs in Niccol’s tenure, after 1,100 corporate workers were let go earlier this year.

“These steps are to reinforce what we see is working and prioritize our resources against them,” Niccol write in a letter to employees. “I believe these steps are necessary to build a better, stronger, and more resilient Starbucks that deepens its impact on the world and creates more opportunities for our partners, suppliers, and the communities we serve.”

In July, the company announced its biggest investment ever into labor and operating standards, “Green Apron Service,” which involves a more than $500 million investment in labor hours across company-owned cafes in the next year.

In an interview earlier this month, Niccol told CNBC, “I really hope we’re moving towards being the world’s greatest customer service company, [and] the world’s greatest customer centric company.”

In the message to employees Thursday, Niccol said the company had reviewed and identified stores where the company would be “unable to to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance.”

In addition to focusing on the customer experience, Niccol has enacted additional changes to operations including a return to four days in office, beginning next month.

He’s also brought on a new executive team including CFO Cathy Smith, Global Chief Brand Officer Tressie Lieberman and Chief Operating Officer Mike Grams. Grams and Lieberman worked with Niccol in his previous roles at Chipotle and Yum Brands.