Starbucks to Shut Hundreds of Stores and Cut 900 Jobs in Major Turnaround Strategy

Starbucks announced on 25 September that it is cutting off 900 non-retail workers and closing hundreds of outlets across the United States, Canada, and Europe in order to concentrate more of its resources on a turnaround.

The massive coffee chain from Seattle said that store closures will begin right away. Starbucks stated that severance compensation and, if feasible, transfers to other locations will be provided to the impacted baristas.

The majority of the closures seem to be in the United States and Canada, though the firm did not specify how many stores are closing. Starbucks stated that by the end of its fiscal year, it anticipates having 18,300 outlets in North America.

The corporation operated 18,734 sites as of June 29. Andrew Charles, an analyst at TD Cowen, predicted in a research note released on 25 September that Starbucks would eliminate about 500 locations in North America during its fiscal fourth quarter.

Starbucks Stores in U.K., Austria and Switzerland to Close Soon

Starbucks Chairman and CEO Brian Niccol announced in a letter to staff members in Europe that some of the company’s outlets in the United Kingdom, Austria, and Switzerland will also be closing. Additionally, Starbucks did not specify the number of locations that will be affected in those countries. According to Starbucks, non-retail staff members whose jobs are being cut will be notified.

“A review of the company’s stores identified locations where the company doesn’t see a path to financial stability or isn’t able to create the physical environment customers expect,” Niccol wrote in a letter issued to employees. According to Niccol, the corporation opens and closes coffee shops annually for a number of reasons, including lease expirations and financial performance. The brand is aware that partners and customers would be impacted by this more important move.

Starbucks coffee shops are community hubs, so shutting any of them is challenging. According to Starbucks, the restructure would cost $1 billion, which includes $150 million for employee separation benefits and $850 million for the liquidation of the physical store and lease termination costs.

No Clarity on Number of Starbucks Stores to be Shut

The number of unionised stores closing was not immediately apparent. Since 2021, employees at 650 Starbucks locations controlled by the firm have voted to become a union, but they have not yet been able to come to an agreement with the business. The labour organisation that organises employees, Starbucks Workers United, stated on 25 September that the closures were carried out without consulting Starbucks baristas.

In order to guarantee that employees can be transferred to another store of their choosing, the union stated that it plans to negotiate at each union-represented store that is closing.

Just over a week after unionised workers in three states sued Starbucks over its new dress code, claiming the business would not pay staff who had to purchase new attire, news of the store closures broke. Starbucks claimed that union presence did not play a role in the selection of the closing locations, which were made based on a consistent set of criteria.