Starbucks is closing about 1% of its stores in the U.S. and Canada—over 150 to possibly around 400 locations—because these stores either did not meet financial performance targets or failed to provide the expected physical environment for customers and employees. This decision is part of a larger $1 billion restructuring effort led by CEO Brian Niccol to manage costs, focus on key growth areas, and revive the brand. The company is also laying off around 900 corporate workers as part of this strategy. Starbucks aims to help displaced employees transfer to nearby stores when possible and is planning to refurbish over 1,000 locations. The closures reflect strategic moves in response to consumer behavior changes, competition, and inflation affecting financial results, as well as a post-pandemic shift away from urban centers where some stores are located.

Reasons for Closure

• Stores lack a profitable path or the ability to create the right atmosphere for customers and partners.
• Consumer movement away from urban centers during and after the Covid-19 pandemic.
• Rising inflation and increased competition impacting sales.

Impact on Employees and Operations

• Over 150 stores will close, with some estimates nearing 400.
• Approximately 900 non-retail corporate employees will be laid off.
• Transfers to nearby Starbucks locations are being offered where possible.
• Significant severance packages will be provided for those not relocated.
• Starbucks will renovate more than 1,000 stores to enhance customer experience.

Strategic Context

• The closures represent about 1% of Starbucks' North American locations.
• It is part of the "Back to Starbucks" strategy to refocus resources on stores and growth.
• Aims to streamline operations and improve long-term growth potential by ending operations in underperforming locations.