Starbucks said on Thursday it would close underperforming coffee shops, mainly in North America, and cut about 900 jobs as part of a restructuring plan under CEO Brian Niccol that would cost about $1 billion.
The company has been revamping its U.S. operations under Niccol's strategy to restore a traditional coffeehouse atmosphere in stores by reducing wait times in a bid to revive sales, while also trimming management layers.
"During the review, we identified coffeehouses 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, and these locations will be closed," Niccol said in a letter to employees.
Starbucks said the job cuts would be in its support teams and added the company would also close many open positions.
The company employed about 10,000 people in non-coffee house roles in the U.S, as of September 29, 2024.
"This is a more significant action that we understand will impact partners and customers," Niccol said.
Overall company-operated store count in North America would decline by about 1% in fiscal year 2025, taking into account closures under the restructuring plan, as well as stores it has opened so far this year, the letter said.
Starbucks is trying to reduce expenses at a time when demand for its pricey lattes has tempered in the United States.
The company said in August it would provide a modest 2% hike to all salaried employees in North America this year.
Starbucks is also trying to sell a stake in its China business, which is battling increased competition and weak demand.
The company's shares were flat in premarket trading. They have fallen 7.7% so far this year.
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The company has been revamping its U.S. operations under Niccol's strategy to restore a traditional coffeehouse atmosphere in stores by reducing wait times in a bid to revive sales, while also trimming management layers.
"During the review, we identified coffeehouses 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, and these locations will be closed," Niccol said in a letter to employees.
Starbucks said the job cuts would be in its support teams and added the company would also close many open positions.
The company employed about 10,000 people in non-coffee house roles in the U.S, as of September 29, 2024.
"This is a more significant action that we understand will impact partners and customers," Niccol said.
Overall company-operated store count in North America would decline by about 1% in fiscal year 2025, taking into account closures under the restructuring plan, as well as stores it has opened so far this year, the letter said.
Starbucks is trying to reduce expenses at a time when demand for its pricey lattes has tempered in the United States.
The company said in August it would provide a modest 2% hike to all salaried employees in North America this year.
Starbucks is also trying to sell a stake in its China business, which is battling increased competition and weak demand.
The company's shares were flat in premarket trading. They have fallen 7.7% so far this year.
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