Starbucks $1 billion restructuring to close stores, cut jobs

Starbucks plans to close stores and eliminate 900 jobs in a $1 billion restructuring effort as the company amps up a turnaround plan under chief executiveBrian Niccol.

The coffee chain, which had about 360 000 global employees last year, said its overall store count in the US and Canada will drop by 1% to 18 300. After that, it plans to grow the number of stores it operates and refurbish another 1 000 restaurants.

Following a review of its coffeehouses, the company identified a number of stores where it couldn’t see a path toward profitability and decided to close them. It plans to focus on stores that align with Niccol’s plan to make its restaurants a more inviting place to visit.

“Early results from coffeehouse uplifts show customers visiting more often, staying longer and sharing positive feedback,” Niccol said in a letter to employees.

The changes being made still don’t “address that their prices have just gotten way too high” for the current competitive and economic environment, Melius Research analyst Jacob Aiken-Phillips said. The turnaround “still a long way to go.”

Niccol, who took the helm a year ago, is attempting to lead a turnaround at the coffee chain after six straight quarters of same-store sales contractions. The plan centers on reviving locations by adding seating and electrical outlets to encourage more visits for longer durations.

Most recently, Starbucks reported sales and profit that missed expectations for the fiscal third quarter. The company is also facing increased competition from smaller chains in the US and China, its two largest markets, that are cranking out cheaper beverages to customers at a faster rate.

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