Starbucks Corp. is closing 250 underperforming stores across North America this week, representing approximately 1% of its 18,000 locations in the US and Canada. According to reports from Bloomberg, the coffee chain is redirecting focus towards outlets with greater growth potential as part of a wider strategy aimed at improving sales and profitability. Chief Operating Officer Mike Grams informed employees that the company identified locations where it cannot consistently deliver the desired customer experience or achieve acceptable financial performance.
The closures are expected to result in $300 million in restructuring charges, as reported in a regulatory filing. Starbucks now expects to add a net 440 stores during the current fiscal year, below its earlier forecast of up to 650 new locations. Looking ahead, the company has outlined plans to rebuild its US store expansion pipeline, targeting around 400 net new company-operated outlets in fiscal 2028. Over the longer term, Starbucks has said its US footprint could grow by at least 5,000 additional stores.
Employees working at stores slated for closure will be offered opportunities to move to other locations where feasible, with workers who cannot be transferred eligible for severance packages, according to Grams' message to employees. The company has started recovering from recent sales weakness, with sales at established stores exceeding expectations in the previous quarter. Starbucks shares were largely unchanged in premarket trading on Thursday, with the stock having risen about 12% through Wednesday this year, compared with an approximately 13% increase in the S&P 500.
The latest closures follow another round of shutdowns announced in September last year when Starbucks said hundreds of North American outlets would be closed as CEO Brian Niccol worked to resize the company's store base. The coffee giant identified locations without a viable route to profitability while prioritising cafes that fit Niccol's strategy of making stores more welcoming destinations for customers. Grams noted that while most locations are benefiting from overall momentum, some continue to underperform despite hard work and commitment from employees.
