Starbucks says it will close low-performing stores across North America as CEO Brian Nicole is pushing for company restructuring efforts.
The coffee chain announced its decision on Thursday.
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Overall, U.S. and Canada stores are expected to decline by 1% or hundreds of stores by the end of fiscal year 2025, including the iconic Seattle Roaster.
Niccol is trying to restore the chain’s “coffee house” feeling to bring customers back to outlets after cutting US sales for six consecutive quarters.
The cuts are expected to affect 900 workers and follow a 1,100-company cut earlier this year. However, the cuts are highlighted by Nicole’s $95.8 million reward package last year, 6,666 times the average barista. According to the Policy Institute’s 2025 Executive Overreport, this is the biggest wage gap from CEO to worker to worker for any S&P 500 company.
Organized stores have become a hit
Among the stores that closed was the location of Starbucks flagship members in Seattle and a large cafe with an in-house roaster, the company confirmed.
Discussions between Starbucks and the Workers United Union, which represents more than 12,000 baristas, began last April, but have since hit a wall.
In December, some members of the union left work in several US cities on a few days of strikes during the peak holiday season.
Workers at a Seattle store near headquarters voted for the union in 2022, and the union picked up the store on Monday over a contract negotiation dispute.
The unionized Chicago store on Ridge Avenue has also been closed, the union confirmed. The store’s barista had picketed on a plan made Thursday morning before the store was known to close, the union said.
The Picket Line barista came from a store in the Chicago area. “We’re here to remind us that it’s the workers who actually take people to the store,” said Diego Franco, who came from a store outside Death Plains.
A Starbucks spokesman said the store’s union status was “not a factor in the decision-making process.”
In a statement, Starbucks workers criticized the closure. “The reason why Starbucks baristas need union support has never been more clear than ever,” the union said, adding that negotiations for affected workers could be planned and transported to other stores.
Analysts at TD Cowen estimate that around 500 North American company-owned stores have been affected by the restructuring.
An attempt to improve
In her first year at work, Nicole invested in Starbucks stores to reduce service times, restored the coffeehouse environment, and trimmed the management layer.
The company has posted a series of quarterly declines in the US as demand for expensive lattes became a hit due to consumers being louder and rising competition.
“During the review, we identified coffee houses that cannot create the physical environment our customers and partners expect, or places where there is no way to financial performance. These locations will be closed,” Nicole said in a letter to employees.
The CEO said the company will end the fiscal year with a total of 18,300 Starbucks locations (company operations and licenses) across the US and Canada. This is compared to the 18,734 locations disclosed in a regulatory filing in July.
Nicole has enjoyed investor confidence since taking over after his leadership at Chipotle Mexican Grill and is believed to have led the transition in the burrito chain.
“Starbucks is taking more aggressive action in its transformation efforts. Store closures have become more than expected, while we believe that layoffs fit the management’s previously announced zero-based budgeting framework.
Starbucks said Thursday that the job cuts will be with the support team, adding that the company will close many open positions.
As of September 29, 2024, the company had employed approximately 10,000 people in non-dispatched roles in the United States.
“This is a more important action we understand as affecting our partners and our customers,” Nicole said.
At the same time, Starbucks is investing in improving staffing and incorporating technology into more efficient sequence orders at coffee shops to enhance the customer experience.
The company said earlier this year it would remove the role of 1,100 companies. In August, it also announced a modest 2% hike for all North American paying employees this year.
