Seattle-based Starbucks is moving forward with a significant restructuring plan that includes closing around 1% of its company-operated stores in North America, eliminating several hundred jobs, and offering severance to impacted employees. This is part of CEO Brian Niccol’s strategy, dubbed “Back to Starbucks,” aimed at reversing slumping sales and refocusing on store performance and customer experience.
What Starbucks Is Doing
- The company will shutter more than 100 stores in North America—about 1% of its total company-owned locations.
- Around 900 non-retail (corporate or support) positions are being cut.
- A total restructuring cost of about $1 billion has been estimated, of which approximately $150 million is being allocated specifically for employee separation and severance benefits.
Severance Package Details
Starbucks has provided details of what retail employees at closing stores will receive:
| Employee Role | Severance Pay Offered |
|---|---|
| Baristas | 60 hours of regular pay |
| Shift Supervisors | 84 hours of pay |
| Café Attendants / Entry-level service & maintenance staff | 30 hours of pay |
On top of pay, affected retail employees will also be eligible for:
- A lump sum payment covering three months’ worth of their health insurance premiums. Health coverage will continue through October.
- In some states, payment for accrued, unused vacation time is granted (though not in all states).
- A 45-day period to sign a release agreement in order to receive severance.
Starbucks is also encouraging transfers to nearby stores for employees where possible. For those who can’t be placed elsewhere, the severance package is intended to provide a cushion while they transition out of the company.
Why It’s Happening
- The “Back to Starbucks” plan is a renewal initiative under CEO Niccol, who has cited declining same-store sales over several quarters.
- Stores identified for closure are those underperforming financially or failing to meet customer experience or “store atmosphere” standards.
- The goal is to strengthen the core business by pruning locations that don’t align with Starbucks’ evolving expectations, enhancing remaining store designs, and improving service.
Potential Impacts & Concerns
- For employees: The severance package offers some relief, but for many, losing work plus the uncertainty of finding new roles is tough—especially when affected by store closures far from other locations.
- Communities & Customers: Store closures mean fewer access points in certain neighbourhoods, potentially inconveniencing frequent customers.
- Brand & Resilience: Starbucks aims to use this restructuring to tighten efficiency, improve profitability, and regain customer loyalty. But execution will be key, especially in managing public perception and employee morale.
- Labor Relations: Unions and worker groups may contest how closures and layoffs are handled, especially around criteria for which stores are being shuttered, whether transfers are fair, and how severance is applied.
What’s Next
- Store closures are expected to roll out quickly, with many taking place before the end of Starbucks’ fiscal year.
- Starbucks plans to refurbish over 1,000 existing stores to make them more inviting and aligned with customer expectations.
- Leadership will be judged on whether these moves translate into stabilized sales, better customer experience, and sustainable growth.
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