Starbucks to Cut 900 Jobs and Close 1% of Locations

Starbucks is eliminating 900 jobs and closing stores as part of its turnaround plan.

The coffee chain plans to decrease its store count by 1%, leaving it with 18,300 locations in the United States and Canada. Eventually, Starbucks plans to add more stores and renovate another 1,000, according to a Thursday (Sept. 25) announcement from CEO Brian Niccol to employees.

The decision to shutter the stores came after a review of the company’s North American operations, the announcement said.

“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,” the announcement said.

The company will focus on Starbucks locations that are more in tune with the Niccol’s effort to make the coffeehouses more inviting and relaxing, per the announcement.

Starbucks has spent the year promoting “sit and stay” visits as a way to reverse a drop in foot traffic and dwindling sales. The company began letting customers buy a beverage in a mug or glass to get a free refill, thus encouraging some shoppers to hang around.

Starbucks Chief Brand Officer Tressie Lieberman said in March that Starbucks is “leaning into our coffee culture.”

“We’re reestablishing Starbucks as the community coffeehouse and reintroducing Starbucks to the world,” Lieberman said, adding the company is also investing in ads on TV and streaming platforms to “evoke the feeling that ‘I want to go to Starbucks.’”

In July, the company announced that it planned to enhance its mobile app, its mobile order-and-pay offering, and its rewards program next year. While management reported a decline in comparable store sales, executives pointed to other metrics they said underlined the progress Starbucks is making with its plans.

“Early results from coffeehouse uplifts show customers visiting more often, staying longer and sharing positive feedback,” Niccol said in his announcement to employees Thursday.

Earlier this year, Scott Stuart, who was CEO of Turnaround Management Association at the time, discussed with PYMNTS  the struggle Starbucks faces in rebranding.

“The brand is strong and, of course, customer appeal is key, but the devil will be in the details in how the name change and the feel of a more intimate ‘coffee shop’ experience for the customer will play out,” he said in January. “It’s not easy to simply roll back to what was. It has to make sense in a vastly different landscape and a much more complex competitive environment.”