Starbucks announced on Thursday that it has approved a restructuring plan aimed at turning around its struggling business, which includes closing underperforming stores and laying off employees. The company expects to incur approximately $1 billion in costs related to this plan, as it seeks to boost sales and profits under CEO Brian Niccol, according to a regulatory filing.
The plan involves permanently shutting down hundreds of locations this month, roughly 1% of its North American stores. As of June, Starbucks had 18,734 stores in the region, which will decrease to around 18,300 by the end of September. In a letter to employees, Niccol explained that the closed stores were those unable to offer the customer experience expected or lacked a viable financial future. About 900 employees at these locations will be laid off, marking the second round of job cuts this year, following 1,000 layoffs in February. Affected staff will be notified Friday and receive generous severance and support. Many open positions will also be eliminated.
This restructuring is driven by falling demand for Starbucks’ premium drinks in the US. Its shares have declined 7.7% this year, reflecting investor concerns.
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