Starbucks to shut about 250 North American stores in turnaround push
Starbucks will close around 250 North American locations, citing weak customer and employee experience and financial viability, with about $300 million in charges expected.
Starbucks is preparing to close roughly 250 stores across North America in the coming days, trimming about 1 per cent of its approximately 18,000-store regional network as the coffee chain presses ahead with a multi-year turnaround.
The company said the affected outlets either failed to deliver the customer and employee experience it is aiming for or were not financially viable. A list of the locations has not been released. Customers are expected to start seeing notices at the stores from this weekend, and the closures will also be reflected in the Starbucks app.
The move is expected to result in about $300 million in charges, according to a regulatory filing. Close to $200 million of that will stem from costs tied to ending leases early and severance benefits for employees.
Chief Executive Brian Niccol had signalled closures on a similar scale a year ago, alongside corporate layoffs, as part of a $1 billion restructuring effort. Since then, the company has been renovating cafes, improving service and simplifying its menu in North America under a plan aimed at reviving growth.
"We remain excited about the significant long-term growth opportunity ahead in North America," Chief Operating Officer Mike Grams said in a letter to employees, adding that the company is building a pipeline of new coffeehouses and remains committed to growth.
Even so, Starbucks now expects to open about 440 new locations globally in the current fiscal year, below its earlier projection of 600 to 650.
The closures come as sales show signs of recovery. US same-store sales rose 7.9 per cent in the company's most recent quarter, a period Niccol described in the July earnings report as the one in which its "momentum became truly measurable."