**Starbucks to Close 250 Underperforming Locations in North America**
Starbucks Corporation announced on Thursday that it will be closing 250 underperforming coffeehouses across North America. This decision, revealed in a regulatory filing, is part of CEO Brian Niccol's ongoing efforts to revitalize the company's sales performance.
The closures come on the heels of a significant restructuring initiative that took place last year, during which Starbucks shut down several locations, including its notable Seattle roastery. That restructuring effort was estimated to cost the company approximately $1 billion. The recent announcement indicates that the upcoming closures will incur around $300 million in restructuring charges and will affect about 1% of Starbucks' roughly 18,000 stores in North America. The company plans to complete most of these closures by the end of its fiscal year 2026.
Market analysts have weighed in on the implications of these closures. Lale Akoner, a global market strategist at eToro, described the decision as a "sensible but costly step" in Starbucks' turnaround strategy. However, she cautioned that if the company fails to see improvements in sales and profit margins, investor patience may wear thin.
Brian Niccol, who completed two years as CEO in September, has been implementing changes aimed at attracting customers back to Starbucks locations. His "Back to Starbucks" plan includes initiatives to reduce wait times and simplify menu offerings in the United States. Additionally, Starbucks has invested in enhancing store and kitchen operations while managing costs through corporate role reductions and the closure of some regional offices.
As of July 2023, Starbucks reported four consecutive quarters of comparable sales growth, with customer traffic increasing across various income levels. Niccol noted in April that despite broader economic challenges, including rising fuel and food costs affecting lower-income households, the company's premium products, such as its lattes, have maintained their appeal.
Brian Jacobsen, chief economic strategist at Annex Wealth Management, acknowledged Niccol's progress but emphasized that the next critical step is to translate this momentum into improved profit margins.
In conjunction with the store closures, Starbucks has adjusted its expectations for global net new store openings for company-operated and licensed locations in fiscal 2026. The company now anticipates opening approximately 440 new stores, a reduction from its previous target of 600 to 650 openings.
As Starbucks navigates this challenging period, the focus remains on revitalizing its brand and ensuring long-term sustainability in a competitive market.