Starbucks announced plans to close about 250 underperforming North American cafes, marking the second round of store closures during CEO Brian Niccol’s two-year tenure. The cuts represent about 1% of the company’s more than 18,000 locations in North America.
The coffee giant confirmed the store reductions alongside a restructuring plan expected to cost about $300 million as part of its ongoing turnaround strategy. The closures target locations that fail to meet financial expectations or standard customer experience benchmarks, though the corporation has not yet disclosed specific addresses or municipal markets affected by the cuts.
Financial Restructuring and Lease Exits
The $300 million restructuring price tag breaks down into two distinct categories. About $200 million will cover the immediate expenses of exiting commercial real estate leases early and providing employee separation benefits. The remaining $100 million accounts for noncash charges tied to the disposal and impairment of company-owned restaurant assets, according to regulatory filings submitted by the company.
Alongside the reductions, Starbucks adjusted its outlook, lowering its projected net new cafe openings for fiscal 2026 from an initial target of 600 to 650 locations down to 440.
Executive Rationale Behind the Portfolio Review
Chief Operating Officer Mike Grams outlined the reasoning behind the closures in a direct letter sent to store employees, noting that management evaluated the North America coffeehouse portfolio to identify struggling outlets.
Grams explained that the ongoing retrofitting of approximately 1,500 North American cafes to create cozier, more inviting environments gave executives a clearer view of individual store performance. While most locations benefited from the physical updates, management determined that a subset of coffeehouses continued to underperform.
Impact on Workers and Unionized Locations
More than 700 U.S. Starbucks stores have voted to unionize since late 2021, though the company and the labor union have not yet reached a labor agreement, according to reporting from the region.
The company stated that managers will attempt to transfer affected workers to other stores whenever possible. For employees where relocation is not feasible, the organization promised severance support.
Long-Term Growth Pipeline
Even with the trimming of its underperforming North American portfolio, corporate leadership insists the contraction is a targeted realignment. Future net new cafe openings will come from its international markets, but executives maintain that North America opportunities remain strong.
The company emphasized in regulatory disclosures that it continues to see significant longer-term growth opportunities across North America and is actively developing a strong pipeline of new coffeehouses.