Starbucks announces 250 store closures

Starbucks has confirmed in an email to FastCasual.com that it is closing 250 underperforming U.S. stores this week, even as its North American business returns to growth. The locations represent roughly 1% of its 18,000 U.S. stores, and each fell short of financial or customer-experience expectations, Starbucks COO Mike Grams said in a letter to company employees.

"As we shared on our most recent earnings calls, our North America business has returned to strong growth. Customers are receiving faster service, a more consistent experience, and warmer, more welcoming coffeehouses. We're accelerating our pace toward completing 1,500 coffeehouse uplifts, and Green Apron Service has become our defining standard. Our Back to Starbucks strategy is working," Grams said in the statement. "This progress has given us a clearer view of the performance of every coffeehouse. While most are benefiting from this overall momentum, some coffeehouses continue to underperform despite the hard work and commitment of all of you."

The closures will result in approximately $300 million in restructuring charges related to leases and employee benefits.

The company told Fast Casual they "are focused on supporting our partners through this transition, including transfer opportunities wherever possible. For partners we are unable to place in another coffeehouse, we will provide severance support."

Represented union status also was not a factor in this decision-making process, the company said via email. "We used an objective set of criteria, including long-term performance and customer experience. These store closures are being implemented through a thoughtful, lawful process," a spokesperson said.

The move to close locations is part of CEO Brian Niccol's turnaround strategy, which has included additional staffing, technology upgrades and efforts to restore the traditional coffeehouse experience. Starbucks reported an 8.1% year-over-year increase in North American comparable-store sales for the quarter ended June 28, but those investments have pressured profits. The company is targeting $2 billion in annual cost reductions by 2028.