In a message to employees Thursday, Niccol said the company reviewed and identified “where it cannot create the physical environment that customers and partners expect, or where there is no path to financial performance.” TD Cowen analyst Andrew Charles wrote to his client that the store was “more than expected.”
Starbucks executives have previously said the company will slow down new openings this year in support of remodeling existing locations. The renovated cafe aims to encourage customers to stay, bringing the coffee chain back to its roots as “third” for consumers, outside of their home or office.
Baristas from the closed location will be transferred to a nearby location or, in some cases, receive a retirement package, Nicole said in a letter to the employee. Starbucks Worker United, representing 12,000 baristas across more than 650 cafes, said in a statement to CNBC it will send a formal request to the company about the closure.
“We expect to engage in the negotiating effect at all affected union stores, as we did elsewhere, so workers can place them in another Starbucks store depending on their preference,” the union said in a statement.
Following Thursday’s announcement, Starbucks’ share was below 1% in afternoon trading. This year, stock prices fell by more than 8%.
In addition to focusing on customer experience, Niccol has enacted additional changes to operations, including a return to office for four days starting next month.
partner,
Everyone is grateful for their work that places world-class customer service at the heart of everything we do and focuses on enhancing the Starbucks experience for all our customers each time.
We are making good progress, but there is more to build a better, stronger, more resilient Starbucks. As we approach the beginning of the new fiscal year, we share two decisions we have made in support of the Back to Starbucks plan. Both are based on bringing resources closest to customers, allowing you to create a great coffee house, provide world-class customer service and grow your business.
Some changes to our coffee shop
First, I shared earlier this year that I have been carefully reviewing my North American coffeehouse portfolio through an additional lens from the Back to Starbucks Plan. Our goal is to bring every coffee shop a warm and welcoming space with a great atmosphere and seating for every occasion.
During the review, we identified coffee houses that were unable to create the physical environment that our customers and partners would expect, or that we had no way to financial performance. These locations will be closed.
Every year, we open and close coffee houses for a variety of reasons, from financial performance to expiration. This is a more important action that we understand as affecting our partners and customers. Our coffee houses are the heart of our community and it is difficult to close the place.
To put it in context: We have already opened a number of coffee houses in the past year, so the overall count of corporate operations in North America will decrease by about 1% in fiscal year 2025, after taking into account both openings and closings.
The fiscal year ends at approximately 18,300 locations in the US and across Canada, with a total of company-operated and licensed Starbucks. In 2026, we will increase the number of coffee houses we operate as we continue to invest in our business. It also plans to improve over 1,000 locations over the next 12 months to introduce texture, warmth and layered designs.
Coffeehouse partners will be notified this week, as they are scheduled to close. We work hard to provide transfers to locations as close as possible, and move quickly so that our partners understand what opportunities are available.
For those who can’t place them right away, we focus on partner care, such as comprehensive retirement packages. We also hope that as new coffee houses open and the number of partners in each location increases, many of these partners will return to Starbucks in the future.
Reduce the role of non-retail partners
Second, it further reduces non-retail personnel and costs. This includes the difficult decision to eliminate the current roles of around 900 non-retail partners and close many open positions.
As we build towards a better Starbucks, we are investing in Green Apron Partner’s time, more partners in our stores, outstanding customer service, increased coffee house design, and innovations to create the future. We will continue to manage costs carefully and focus on key areas that drive long-term growth.
Non-retail partners whose roles are removed will be notified tomorrow morning (Friday). We offer generous retirement and support packages.
Unless your job specifically requires you to be in the office, we ask you to work from home today and tomorrow.
What’s next?
These steps are to enhance what we are seeing and prioritize resources for them. Early results of coffee shops uplifts show that customers visit more frequently, stay longer and share positive feedback. We invested in greener apron partner time, so we saw improvements in transactions, sales and service times along with happier and enthusiastic partners as more partners work during busy times.
I know these decisions will affect our partners and their families, and we didn’t lighten them. I think these steps are necessary to build a better, stronger, more resilient Starbucks that will deepen our impact on the world and create more opportunities for our partners, suppliers and the communities we serve.
I would like to say a deep thank you to your partner as he leaves. For those who continue on their turnaround journey, we are deeply grateful for your commitment to helping us return to Starbucks.
Brian
