Starbucks to Shut 200 Stores as Part of Turnaround Plan

Starbucks is pressing forward with another round of sweeping changes, announcing plans to cut 900 corporate jobs and close a number of underperforming stores in the United States and Canada. The move comes as the company approaches the one-year mark of its turnaround effort under Chief Executive Officer Brian Niccol, who was brought in to reenergize the brand and deliver long-term growth.

The coffee giant said store count across North America will shrink by about 1% this year, which translates to roughly 200 closures. By the end of the fiscal year, Starbucks expects to have nearly 18,300 stores across the U.S. and Canada. The corporation intends to reinvest extensively while closing some stores. This will include renovating over 1,000 current stores and building new locations in areas with greater demand. These actions are a part of a larger endeavour to modernise processes and make sure the company is set up for future expansion, executives said.

Thursday’s announcement marks the second round of corporate layoffs at Starbucks this year, part of Niccol’s “Back to Starbucks” initiative. The restructuring aims to streamline decision-making, reduce bureaucracy, and concentrate resources on areas most likely to deliver growth. While job cuts and store closures are painful in the short term, the company maintains they are necessary to reset its foundation.

Niccol is attempting to bring to Starbucks a strategy that proved successful during his time at Chipotle Mexican Grill. He took over as Chipotle’s CEO in 2018, at a time when the fast-casual chain was reeling from a food safety scandal that had eroded consumer trust and sent shares plunging more than 60% from their peak. Niccol swiftly implemented a turnaround strategy that involved closing over 50 underperforming sites, firing close to 400 employees, and moving Chipotle’s headquarters from Denver to Newport Beach, California.

At the same time, he worked to improve the customer experience and put money into digital outlets, such as partnerships for delivery and mobile ordering. These changes made things easier, streamlined processes, and brought back customers. The result was a very good improvement. During Niccol’s six years at the helm, Chipotle’s sales grew strongly and its stock price surged more than eightfold, rising from around $6 a share in 2018 to about $56 by the time he departed for Starbucks in 2024.

Niccol’s plan will have a harder time this time because Starbucks is a bigger and more complicated business than Chipotle. The company has to deal with a wide range of customer tastes, economic problems, and business settings because it has stores all over the world. The company is having more trouble now that pay and supply costs are going up and the beverage business is becoming more competitive.

The current effort to reform, on the other hand, is meant to deal with these problems directly. If stores weren’t doing well, they were shut down. This makes things more organised. The renovations are meant to update the interiors, make the layouts better, and connect the digital buying systems better. He wants to update things because he thinks Starbucks needs to do so to meet the needs of its customers, especially since mobile and drive-thru orders are becoming more and more important to the company.

Another important part of the plan is that it would cut corporate jobs. Starbucks is going to let go of 900 employees to get rid of unnecessary overlap and make the company leaner, which will help it change more quickly. Despite the possibility of temporarily upsetting employees, analysts believe this could help Starbucks stay competitive.

Investors were hopeful when Niccol was appointed CEO of Starbucks because they thought he would be able to duplicate the success he had at Chipotle. However, because the turnaround has not yet produced significant outcomes, the stock has seen volatility over the previous year. Some market watchers argue that the changes underway are foundational and will take time to show up in earnings and customer loyalty metrics.

The next year will be a crucial test of whether Niccol’s turnaround plan can succeed. With 900 job cuts, about 200 store closures, and more than 1,000 renovations on the horizon, Starbucks is betting that its combination of pruning weaker spots and reinvesting in growth will pay off. If Niccol can replicate even part of his Chipotle success, Starbucks may be able to emerge stronger, leaner, and better equipped to compete in an increasingly dynamic global coffee market.