Starbucks to lay off 900 employees, close stores in North America as part of restructuring

American coffeehouse chain Starbucks has said it will lay off about 900 employees and close underperforming coffeehouses as part of a sweeping restructuring under its “Back to Starbucks” strategy. The company expects to incur about $1 billion in related costs, with most of the expenses tied to its North America business.

The restructuring includes about $150 million in employee separation benefits, $400 million for disposal and impairment of store assets, and $450 million in lease-related charges. Starbucks estimates roughly $400 million of these charges will be non-cash, while $600 million will represent future cash outflows.

Chief executive officer Brian Niccol said in a letter to employees that the layoffs will impact non-retail partner roles and current open positions will also be closed.

“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,” he wrote.

For those who cannot be placed, Starbucks will provide “comprehensive severance packages.” Non-retail employees whose roles are being eliminated will also receive “generous severance and support packages including benefits extensions,” Niccol said.

The coffee giant said store closures will reduce its North America company-operated count by about 1% this fiscal year, leaving it with nearly 18,300 locations across the US and Canada. Starbucks emphasised that it continues to open new stores and plans to grow its footprint again in fiscal 2026. Over the next 12 months, it will also renovate more than 1,000 coffeehouses to create “greater texture, warmth and layered design.”

Niccol said the changes are intended to prioritise investment in customer-facing roles and elevated store experiences. “These steps are to reinforce what we see is working and prioritise our resources against them. I know these decisions impact our partners and their families, and we did not make them lightly. I believe these steps are necessary to build a better, stronger and more resilient Starbucks,” Niccol wrote.

Starbucks announced Brian Niccol as the Chairman and CEO of the company in August 2024, ousting Laxman Narasimhan who took the job barely two years ago in October 2022. This change came amid the company facing weak sales in US and China, which Narashimhan struggled to improve.