Starbucks is closing stores primarily because some locations are underperforming financially or cannot provide the physical environment and customer experience expected. The company is executing a restructuring plan led by CEO Brian Niccol, which involves closing about 1% of its North American stores—approximately 400 stores in the near term, with a total reduction of several hundred stores expected by the end of the 2025 fiscal year. This move aims to focus resources on more profitable locations and renovate over 1,000 stores to enhance customer experience. The closures are part of a broader $1 billion restructuring effort that also includes laying off approximately 900 non-retail corporate staff members. Starbucks experienced six consecutive quarters of declining same-store sales, influenced by increased competition and changes in consumer spending habits. The closures and layoffs are intended to stabilize the business, manage costs better, and prioritize investment in more successful stores to foster long-term growth. Severance packages and support are being offered to affected employees, and the company is facilitating transfers to nearby locations when possible. The plan is expected to help Starbucks resume store growth in fiscal 2026 after this corrective phase. In summary, Starbucks is closing stores because some are not financially viable or suitable for the desired customer experience, and the closures are a key part of a strategic restructuring to strengthen the company’s future performance and customer appeal.
