Starbucks has announced a major $1 billion restructuring plan aimed at reshaping its North American operations, which includes closing around 400 underperforming stores across the U.S. and Canada and cutting approximately 900 corporate positions.
The company expects the changes to reduce its North American store count by roughly 1% by the end of fiscal year 2025.
CEO Brian Niccol said the closures are focused on locations that have struggled to deliver the desired customer experience or achieve financial targets.
“We are making these changes to ensure Starbucks continues to provide an exceptional customer experience and remains sustainable in a competitive market,” Niccol said. Affected employees will receive notice this week, with options for transfers to nearby stores where feasible and severance packages designed to ease the transition.
The restructuring also includes a substantial investment in renovating more than 1,000 existing locations.
Starbucks plans to enhance store designs with improved textures, lighting, and layout to create warmer, more inviting environments for customers. Niccol emphasized that the renovations are part of a broader strategy to modernize stores and reinforce brand loyalty.
On the corporate side, around 900 non-retail positions will be eliminated, including the departure of Chief Technology Officer Deb Hall Lefevre. Ningyu Chen, formerly Senior Vice President of Global Experience Technology, has been appointed interim CTO.
Starbucks is increasingly leveraging Tata Consultancy Services for IT and operational support, reflecting a shift toward outsourcing certain functions to streamline efficiency.
The restructuring follows several quarters of declining sales in North America, with the company reporting six consecutive quarters of soft performance in its core markets. Rising costs, competitive pressures from specialty coffee chains, and changing consumer habits have contributed to the need for strategic realignment. Analysts note that Starbucks’ moves are aimed at improving long-term profitability while maintaining the quality and consistency of its customer experience.
Investors reacted cautiously to the announcement, with shares dipping slightly in after-hours trading.
Despite market concerns, Starbucks maintains that the changes are part of a deliberate, forward-looking plan. Financial analysts have highlighted that while the near-term impact may include reduced revenue from closed stores and severance costs, the focus on efficiency and store modernization could strengthen the company’s competitive position over time.
Industry observers point out that Starbucks’ strategy reflects broader trends in retail and food service, where companies are optimizing footprints, focusing on high-performing locations, and leveraging technology to enhance customer engagement. Starbucks’ decision to invest in renovations while reducing corporate overhead signals an attempt to balance operational efficiency with customer-centric improvements.
As Starbucks moves forward with its restructuring, the company has pledged to support impacted employees and ensure minimal disruption to customers. The combination of store closures, corporate reductions, and targeted renovations underscores a commitment to long-term growth, operational resilience, and sustained market leadership in the North American coffee sector.
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