Starbucks, the world's largest coffeehouse chain, is reportedly planning to layoff hundreds of workers and close stores nationwide as part of its $1 billion restructuring plan, CEO Brian Niccol announced in a memo shared on its news blog Thursday (September 25).
The company plans to cut 900 jobs and decrease its total stores in North America by roughly 1%, bringing its total to nearly 18,300 for the end of the fiscal year.
"Over the next 12 months, we also plan to uplift more than 1,000 locations to introduce greater texture, warmth, and layered design," Niccol wrote. "Partners in coffeehouses scheduled to close will be notified this week. We’re working hard to offer transfers to nearby locations where possible and will move quickly to help partners understand what opportunities might be available to them."
"Second, we’re further reducing non-retail headcount and expenses. This includes the difficult decision to eliminate approximately 900 current non-retail partner roles and close many open positions," he continued. "As we build toward a better Starbucks, we’re investing in green apron partner hours, more partners in stores, exceptional customer service, elevated coffeehouse designs, and innovation to create the future. We will continue to carefully manage costs and stay focused on the key areas that drive long-term growth."
Starbucks' shares ticked slightly higher in pre-market trading after the company made its announcement Thursday morning. The coffee giant managed to outlast sluggish sales brought on by elevated inflation in recent years, having experienced six consecutive quarters of decline.
Starbucks has attempted to improve the interior of its stores in an effort to attract more customers and Niccol said stores where changes would not be achievable would be among the closures.
"During the review, we identified coffeehouses where we’re unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance, and these locations will be closed," Niccol said.
"Each year, we open and close coffeehouses for a variety of reasons, from financial performance to lease expirations. This is a more significant action that we understand will impact partners and customers. Our coffeehouses are centers of the community, and closing any location is difficult," he added.