The Seattle-based company, which operates thousands of cafes including in Portugal, announced that the store closures would begin immediately but did not disclose how many locations would be shut down.
However, it stated that it expects to have 18,300 locations in North America by the end of its fiscal year this Sunday, reflecting a decrease of 124 stores from the conclusion of the fiscal year 2024. On June 29, the company had 18,734 stores.
Starbucks noted that its store employees would receive transfer offers to other stores where possible, along with severance packages, as reported by the Associated Press (AP).
The group indicated that it would notify employees whose positions are being eliminated on Friday morning and requested those capable of working remotely to do so on Thursday and Friday.
In a letter sent to employees today, Starbucks President Brian Niccol stated that an analysis of the company’s stores identified locations without a foreseeable path to financial stability or the ability to create the expected customer environment. These locations are being shut down.
“Every year, we open and close cafes for various reasons ranging from financial performance to lease terminations,” wrote Niccol. “This is a more significant action that we understand will impact partners and customers. Our cafes are community hubs, and closing any is difficult,” he acknowledged.
Starbucks disclosed plans to spend approximately one billion dollars in restructuring (850 million euros), including 150 million dollars (127 million euros) for employee severance payments and 850 million dollars (722 million euros) on the physical closures of stores.
Niccol asserted that Starbucks aims to increase its store count in North America in the next fiscal year and plans to redesign over 1,000 locations in the coming 12 months to create a more welcoming and inviting atmosphere.
This marks the second major round of layoffs at Starbucks this year. In February, Niccol announced the dismissal of 1,100 corporate employees globally and eliminated several hundred open positions.
Niccol, a turnaround specialist, was recruited by Starbucks a year ago to revitalise the brand.
In July, Starbucks recorded its sixth consecutive quarter of declining same-store sales.
