Starbucks is shutting 400 stores as part of a $1B restructuring plan. Find out why the coffee giant is shrinking and how it impacts customers and investors.
Table of Contents
Why Starbucks is Closing Hundreds of Stores
Starbucks has long been known as the coffee chain on every corner, but those days are changing. The company recently announced it will close 1% of its North American stores — about 400 locations — as part of a $1 billion restructuring plan. Alongside these closures, Starbucks is also laying off 900 corporate employees.
While the closures are small compared to the chain’s 32,000+ stores worldwide, the move signals a major shift in Starbucks’ business strategy. Let’s explore what’s behind this decision, how it impacts customers, and what the future holds for the coffee giant.
Why is Starbucks Closing Stores?
According to CEO Brian Niccol, the stores being shut down weren’t meeting customer expectations or were not profitable. But the closures run deeper than just financial losses.
- Pandemic Shifts: Many consumers moved away from urban centers during Covid-19, reducing foot traffic in city-based Starbucks stores.
- Rising Competition: Starbucks faces growing pressure from independent coffee shops, niche brands like Blue Bottle Coffee and Blank Street Coffee, and fast-growing drive-thru chains like Dutch Bros.
- Price Sensitivity: A UBS survey revealed that 70% of customers cited higher prices as the main reason for cutting back on Starbucks. The company struggles most with consumers earning under $100,000 a year.
- Economic Pressures: Inflation and global uncertainty continue to affect both consumer spending and operational costs.
Starbucks’ Turnaround Plan
Despite the closures, Starbucks isn’t going anywhere. In fact, it still plans to open new stores in the coming year. The company is restructuring to win back customer loyalty and investor confidence.
Key Moves Under CEO Brian Niccol:
- Cutting 30% of the food and drink menu to simplify operations.
- Bringing back barista traditions like Sharpie doodles on cups.
- Renovating 1,000 U.S. stores with couches, tables, and power outlets to restore the “third place” concept between home and work.
- Ending the open bathroom policy for non-paying customers.
- Laying off more than 2,000 corporate employees in 2024–25 to streamline costs.
Niccol, who previously turned around Chipotle and Taco Bell, has already received nearly $100 million in compensation, signaling investor confidence in his leadership.
Investor Concerns and Market Reaction
Starbucks stock has been under pressure, dropping around 9% year-to-date. The chain has also reported six consecutive quarters of declining same-store sales.
Analysts like BTIG’s Peter Saleh say the turnaround is taking longer than expected but remain optimistic about Starbucks’ future. They predict meaningful improvements by 2026, once the restructuring measures begin showing results.
What It Means for Customers
For everyday coffee lovers, the closures may be noticeable in urban areas where multiple Starbucks locations existed. However, Starbucks’ strategy suggests the brand is focusing on quality, not quantity.
Expect to see:
- Fewer but better-designed stores with seating and amenities.
- Streamlined menus to reduce wait times.
- A balance between digital orders and the traditional in-store café experience.
FAQs About Starbucks Store Closures
1. How many Starbucks stores are closing in 2025?
About 400 North American stores (1%) will be shut down as part of a $1 billion restructuring plan.
2. Is Starbucks going out of business?
No. Starbucks still has more than 32,000 global locations and plans to open new stores even as it closes underperforming ones.
3. Why are Starbucks prices so high?
Rising labor costs, inflation, and premium ingredients contribute to Starbucks’ higher menu prices.
4. Who is leading Starbucks’ turnaround?
CEO Brian Niccol, who successfully revitalized Chipotle, is now steering Starbucks through its restructuring plan.
5. Will customers see changes in stores?
Yes. Starbucks is renovating 1,000 stores with better seating and reintroducing personal touches like barista doodles on cups.
Conclusion
Starbucks’ decision to close hundreds of stores may look like a setback, but it’s part of a larger restructuring effort to regain profitability and customer trust. With fierce competition, rising costs, and shifting consumer habits, the coffee giant is betting on fewer, higher-quality stores and a renewed café experience.
If CEO Brian Niccol’s strategy succeeds, Starbucks could once again dominate not just with ubiquity, but with customer connection and brand loyalty.