Starbucks is embarking on its most sweeping reorganization in years, rolling out a $1 billion restructuring plan that will close underperforming stores and eliminate hundreds of non-retail jobs across North America. The company is framing the move as a pivotal step in its “Back to Starbucks” turnaround strategy under CEO Brian Niccol.
Over 100 Cafes to Close as Portfolio Is Trimmed
According to a regulatory filing, the total number of company-operated stores in North America will shrink by about 1% in fiscal 2025—meaning more than 100 cafés could close their doors. Starbucks operated more than 11,400 company-run locations in the region as of June 29. The company expects to end the fiscal year with nearly 18,300 locations when licensed cafés are included and says growth will resume in 2026.
Niccol explained in a letter to employees that Starbucks had reviewed its North American coffeehouses “through the additional lens of our Back to Starbucks plan” and identified stores “where we’re unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance.”
Baristas at affected stores will be offered transfers to nearby locations where possible or severance if no placement can be made. Starbucks Workers United, which represents 12,000 baristas at more than 650 cafés, said it will be seeking “effects bargaining for every impacted union store … so workers can be placed in another Starbucks store according to their preferences.”
900 Non-Retail Jobs Eliminated
Beyond the store portfolio cuts, Starbucks is reducing overhead. About 900 non-retail employees will be laid off on Friday, on top of the 1,100 corporate roles eliminated earlier in Niccol’s tenure. The company expects to incur roughly $150 million in employee separation costs and about $850 million tied to store closures. Roughly 90% of the total $1 billion restructuring cost will be absorbed by the North American business.
Niccol told employees, “These steps are to reinforce what we see is working and prioritize our resources against them. I believe these steps are necessary to build a better, stronger, and more resilient Starbucks that deepens its impact on the world and creates more opportunities for our partners, suppliers, and the communities we serve.”
Fighting a Sales Slump
Starbucks’ same-store sales in North America have declined for six consecutive quarters, pressured by tougher competition and more price-conscious customers. Executives have already slowed new store openings in favor of remodeling existing locations—revamped cafés are designed to encourage customers to linger and recapture the chain’s original “third place” appeal outside home and work.
The company is also investing heavily in frontline labor. In July it announced “Green Apron Service,” a $500 million commitment to add labor hours across company-owned cafés over the next year. Early tests of “coffeehouse uplifts” show customers visiting more often, staying longer and giving positive feedback, while stores with more partner hours report improved transactions, sales, and service times.
New Leadership and Work Rules
To drive the turnaround, Niccol has refreshed his executive team, bringing in CFO Cathy Smith, Global Chief Brand Officer Tressie Lieberman and Chief Operating Officer Mike Grams—two of whom worked with him at Chipotle and Yum Brands. He has also reinstated a four-day-in-office policy for eligible employees starting next month.
What It Means for Investors
For shareholders, the restructuring highlights Starbucks’ willingness to take painful steps to address declining traffic and protect margins. Although shares were flat in early trading on Thursday and are down more than 7% this year, management is betting that closing underperforming stores, reducing overhead, and reinvesting in service quality will set the stage for renewed growth in 2026 and beyond. If the plan succeeds, investors could see a leaner, more profitable Starbucks with a refreshed brand image and stronger customer loyalty.
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