Starbucks announces the closure of hundreds of cafes and a second round of layoffs. CEO Brian Niccol shared the news on Thursday as part of a larger plan to improve the company’s performance.
Around 1% of Starbucks’ stores, roughly 400 locations, will shut down by the end of September. The company had 18,734 stores in North America at the end of June and expects to have about 18,300 by month’s end.
According to Niccol, the closures are based on a review that identified stores that could not meet customer and employee expectations or were not financially sustainable.
In addition to the store closures, Starbucks is cutting 900 more corporate jobs. This follows about 1,000 layoffs that were already announced back in February.
Starbucks says it expects to spend around $1 billion on its ongoing business changes, with about 90% of that cost affecting its North American operations. Most of the spending will happen in fiscal year 2025, the company said.
In a filing, Starbucks explained that it plans to invest more directly in its stores and customers as it works to turn around falling sales in its biggest market, the United States.
This is the second round of job cuts under CEO Brian Niccol. Earlier this year, 1,100 corporate jobs were eliminated, and now another 900 jobs are being cut.
“These actions are about focusing on what’s working and putting our energy and resources behind it,” Niccol said in a letter to employees. “I believe they’re necessary to build a stronger, more successful Starbucks that makes a bigger impact and creates more opportunities for our people and communities.”
Back in July, Starbucks also announced its biggest-ever investment in improving service, called the “Green Apron Service.” It includes spending over $500 million to add more labor hours in company-owned stores over the next year.