Starbucks has unveiled a sweeping $1 billion restructuring plan that includes closing a number of North American stores and laying off additional employees. The move is part of the company’s “Back to Starbucks” transformation, led by CEO Brian Niccol, aimed at reviving sales in its most critical market.
According to the company’s filing with the U.S. Securities and Exchange Commission (SEC), the total number of company-operated stores in North America will decline by about 1% in fiscal year 2025, after accounting for both new openings and closures. An estimated 900 employees will be laid off during this period.
Starbucks projects that 90% of the $1 billion restructuring costs will be tied to its North American business, with most expenses incurred in FY2025.
In its official statement, Starbucks emphasized its top priority: investing closer to the coffeehouse and the customer. The company aims to strengthen in-store experiences and address declining sales in its largest market.
This marks the second round of job cuts since Niccol assumed the CEO role. Earlier this year, about 1,100 corporate employees were laid off.
In a letter to employees, Niccol wrote:
“These steps are designed to reinforce what is working and to focus resources on our top priorities. I believe they are necessary to build a stronger, more resilient Starbucks that creates value for our partners, suppliers, and the communities we serve.”
In July, Starbucks announced its largest labor investment to date through the “Green Apron Service” initiative. The company pledged more than $500 million in additional labor hours across its company-owned cafés over the next year.
Speaking to CNBC earlier this month, Niccol expressed his vision:
“I hope we’re moving toward becoming the world’s greatest customer service company — and the most customer-centric company in the world.”
Starbucks’ restructuring comes amid rising challenges in the global food and beverage (F&B) sector. Post-pandemic consumer behavior has shifted significantly, with customers increasingly favoring takeaway orders and delivery apps instead of in-store visits.
Moreover, Starbucks faces stiff competition from both local and international players. In the U.S., rivals such as McDonald’s McCafé and Dunkin’ continue to push aggressive promotions. Meanwhile, in many international markets, independent cafés and tea chains appeal to younger consumers with lower prices and local flavors.
These pressures have forced Starbucks to rethink its store footprint strategy, focusing on high-performing outlets that align with consumer expectations.
Analysts note that large-scale job cuts may create short-term challenges for remaining employees but could also streamline operations and boost efficiency.
Still, the layoffs raise questions about Starbucks’ long-standing image as a socially responsible company. The brand has historically been recognized for its commitment to sustainability, ethical sourcing, and community engagement. Balancing profitability with social responsibility will remain a key challenge.
Beyond closing underperforming locations, Starbucks is also making changes to its corporate culture and operations. Starting next month, corporate staff will be required to return to the office four days a week.
Niccol has also reshaped the company’s executive team, bringing in:
Cathy Smith as Chief Financial Officer
Tressie Lieberman as Global Chief Brand Officer
Mike Grams as Chief Operating Officer
Both Grams and Lieberman previously worked alongside Niccol at Chipotle and Yum Brands, reflecting his strategy of building a trusted leadership circle.
Market observers believe Starbucks’ $1 billion restructuring is a bold but necessary step to regain growth momentum. However, the short-term impact may pressure profits due to high restructuring costs.
If successful, the “Back to Starbucks” strategy could help the company reposition its brand, enhance customer experience, and reaffirm investor confidence in global markets.
Starbucks’ $1 billion restructuring underscores the company’s determination to reshape its operations, strengthen customer connections, and optimize financial performance. Yet, the initiative also presents significant challenges related to workforce morale, brand reputation, and operational costs.
As competition intensifies, Starbucks must prove that its new strategy can not only improve profitability but also uphold its commitments to employees, suppliers, and the communities it serves.
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