Starbucks Corporation (NASDAQ: SBUX) plans to close roughly 400 stores across the U.S., mainly in big cities where locations sit too close together. CEO Brian Niccol, who joined from Chipotle last year, sees this as key to fixing deeper problems. The moves fit a $1 billion restructuring effort to make the chain stronger.
City centers once buzzed with commuters grabbing coffee on the way to work, but habits changed after the pandemic. People shifted to remote work, thinning out morning foot traffic in downtowns. Stores clustered for convenience now compete with each other for fewer customers, hurting sales. Niccol wants space between locations to draw more steady traffic without overlap.
Same-store sales dropped for six straight quarters, hit by inflation and picky spenders. Rivals like Dutch Bros and Luckin Coffee grab market share with faster service or lower prices. Digital orders surged, but that pulled focus from the cozy “third place” vibe between home and office.stocktwits+2​
Niccol brought Chipotle lessons on efficiency and customer focus. He cut 30% of menu items to speed up service and brought back baristas writing on cups. The company invests over $500 million in staff hours for better in-store experiences. Renovations hit 1,000 U.S. stores with more seating and outlets to lure lingerers.
Corporate changes include laying off 900 non-store staff and a four-day office return. This “Back to Starbucks” push slows new openings to fix existing spots first. Niccol aims for resilience amid competition and costs.
Coffee demand grows, but habits evolve with apps and drive-thrus. Consumers order online more, skipping lines but missing the store atmosphere. Chains like Dutch Bros thrive on suburban drive-thrus, while urban Starbucks fights low traffic. Rising wages and rent squeeze margins in dense areas.
Remote work lingers, with fewer office commutes. Inflation makes people skip extras, favoring home brews or cheaper options. Starbucks nets over 32,000 global stores, so 400 closures trim just 1% in North America.
Baristas from closing stores are either relocated to nearby locations or receive severance packages, while unions continue to push for discussions on the broader impacts. Analysts remain cautiously hopeful, noting that a full recovery may extend into 2026. Optimism persists, however, bolstered by Niccol’s strong leadership record at Chipotle.
Starbucks’ store spacing strategy allows each location to attract stronger traffic, supported by menu changes and ongoing store upgrades that aim to rebuild customer loyalty. Adapting to digital trends and suburban growth remains essential as the company positions itself for steady, sustainable expansion in the years ahead.
