Starbucks has announced major changes: the company will close hundreds of stores in North America and conduct a second round of layoffs at its headquarters. According to CEO Brian Niccol, these steps are aimed at reviving the business, which is experiencing difficult times.
Starbucks Closes Hundreds of Stores and Announces More Layoffs
The closures will affect approximately 1% of the chain’s stores—by the end of September, the number of stores in the region will be reduced from 18,734 to 18,300. The company will spend approximately $1 billion on restructuring. Meanwhile, Starbucks shares (SBUX) remained unchanged in premarket trading.
In a letter to employees, Niccol noted that the layoffs will target underperforming stores or those that do not meet brand standards. “Our stores are hubs of community life, and closing any of them is difficult. But we must make serious decisions for the future of the company,” he emphasized.
In addition to the closures, approximately 900 more people will be laid off. This is in addition to the thousand layoffs in February. Starbucks has promised to pay compensation and support to employees affected by the changes. The company will also freeze some open positions.
Despite the harsh measures, management is promising a return to growth: over a thousand stores are planned to be renovated. The updated stores will feature a new design—more comfortable seating, more power outlets, and a welcoming atmosphere.
In his year at the helm, Brian Niccol has managed to reduce the menu by a third, introduce new products, and shift the company’s focus. However, financial performance remains weak: shares fell 12% during this period, and sales have shown no significant growth.
Not all changes have been welcomed. Baristas complain about overly complex drinks and new uniform policies, which have already led to lawsuits. Nevertheless, Niccol is confident that the company must overcome this phase to emerge from the crisis more resilient.
