Starbucks is taking big steps to improve its business in North America. The company announced the closure of approximately 124 underperforming stores and laid off 900 non-retail employees. These moves are part of a $1 billion plan to focus more on customers and store performance.
CEO Brian Niccol said the closures are necessary to make Starbucks stronger. He explained that some stores were not meeting financial goals or giving customers the experience they expect. Niccol said, “Our coffeehouses are centers of the community, and closing any location is difficult.” Despite these changes, Starbucks will still have about 18,300 stores in the US and Canada by the end of the year.
Employees affected by job cuts will receive support, including severance pay and extended benefits. Some may have the option to transfer to nearby stores. The company said it will help workers through this transition.
The company will also invest in improving its stores. In over 1,000 locations, new designs will be installed over the next year to offer warmer and more welcoming spaces. More staff hours will be allocated in Starbucks stores to increase customer service and make visits more enjoyable.
This plan is part of Niccol’s “Back to Starbucks” strategy, aimed at turning around the brand. Niccol, who helped grow Chipotle in the past, is focusing on making Starbucks simpler, more efficient, and more customer-focused.
Most of the $1 billion cost will come from North America. A large part will go toward severance, lease terminations, and updating stores. Starbucks believes these changes will help the company grow stronger and improve its reputation among customers.
Despite such closures and layoffs, Starbucks keeps the essence of coffee, service, and connection to the community alive. The plan aims to create a better experience for the customers that will allow the company to grow in the long-term, given today's competition.