Dive Brief:
- Starbucks is closing 250 underperforming North American stores as part of its turnaround plan, according to a filing with the U.S. Securities and Exchange Commission.
- The brand said most of the closures would be completed by the end of its fiscal year, which is in late September. The closures will lead to net new global company-operated and licensed openings of 440 units for the fiscal year instead of 600 to 650 net openings previously announced.
- This is the second consecutive year in which Starbucks has announced a sizable wave of store closures just before the end of the fiscal year. Last year, the brand shuttered about 400 stores and laid off 900 corporate workers at the end of September.
Dive Insight:
Starbucks said the closures would impact about 1% of its roughly 18,000 North American locations — but the chain didn’t break down the proportion of corporate and licensed stores impacted by the closures. The chain has about 11,000 corporate locations in the U.S. and Canada, per its most recent earnings release.
Starbucks said the closures would take place at units that “do not deliver the coffeehouse experience and financial performance expected of the brand.”
At the same time, Starbucks has accelerated the pace of its experiential remodels after surpassing the 1,000-store remodel mark earlier this year with the expectation of completing 1,500 remodels by the end of fiscal year 2026. Starbucks said it will accelerate these remodels into fiscal 2027.
In a press release earlier this week, Starbucks said it had remodels “underway across a growing number of markets including Atlanta, Austin, Dallas, Houston, Miami, Nashville, Orlando, Seattle and Washington, D.C., among others.”
In a Thursday statement, Mike Grams, Starbucks chief operating officer, said the pace of remodels gave the chain greater insight into store-level performance.
“While most are benefiting from this overall momentum, some coffeehouses continue to underperform despite the hard work and commitment of all [Starbucks employees],” Grams wrote.
The chain is communicating with impacted workers and will offer transfers to many, while paying severance to workers it cannot place elsewhere in its system, Grams said.
Per the SEC filing, Starbucks expects the closures to cost about $300 million.
“$200 million will be cash charges primarily related to lease exit costs and employee separation benefits,” the company said“The remaining $100 million will be non-cash charges due to disposal and impairment of company-operated coffeehouse assets.”
