Starbucks to lay off 900 workers, close stores in North America

(ABC NEWS) — Coffee giant Starbucks will lay off workers and close stores as part of a $1 billion restructuring plan, CEO Brian Niccol said in a memo to employees on Thursday.

The company will slash 900 employees at its stores in North America, Niccol said. The store closures will amount to a roughly 1% decline in the total number of Starbucks locations in North America in this fiscal year, after accounting for some store openings, Niccol added.

“While we’re making good progress, there is much more to do to build a better, stronger, and more resilient Starbucks,” Niccol said.

Shares of Starbucks ticked slightly higher in pre-market trading after the announcement early Thursday morning.

Starbucks weathered sluggish sales in recent years as customers grappled with a years-long bout of elevated inflation, analysts previously told ABC News. The company has experienced six consecutive quarters of declining same-store sales, a metric that examines performance at individual locations over time.

Starbucks has sought to improve the interior of many of its stores in an effort to draw customers and boost sales. In a review of its locations, the company identified stores where such changes would not be achievable, Niccol said.

“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,” Niccol added.

The company expects to end fiscal year 2025 with 18,300 store locations in the U.S. and Canada, Niccol said. Starbucks plans to inform employees this week at stores designated for closure.

Starbucks hopes to relocate the employees to other stores, Niccol said, adding that the company will otherwise aim to provide “comprehensive severance.”