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Last week, Starbucks announced that it would close hundreds of stores across the U.S., Canada, and Europe, and lay off approximately 900 corporate workers.
Starbucks wouldn’t say exactly how many stores would close, Dee-Ann Durbin reports for the AP, just that it would be around one percent. One analyst estimated this would equal about 500 stores in North America.
In a letter to staff, CEO Brian Niccol wrote that the company “identified coffeehouses where we’re unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance.” Baristas at impacted stores will be offered transfers to other nearby locations, the letter said.
This is the second time that Starbucks has laid off corporate workers and closed stores this year. The company stated that it would invest approximately $1 billion in restructuring, including severance packages and breaking leases.
Despite the letter being about closing stores, Niccol said Starbucks expects to grow its store count next year. Starbucks also plans to redesign more than 1,000 locations to bring them closer to the “welcoming coffeehouse” he envisaged in his “Back to Starbucks” plan, launched by the CEO to combat years of declining sales.
According to a report by Redd Brown in Bloomberg, investors “largely shrugged at the announcement.” While Starbucks shares fell slightly, Brown reported that “Wall Street might have wanted deeper cuts for a company with 360,000 employees as of last year and 41,000 locations globally.”
Read the full story on Starbucks’ cost-cutting measures from the Associated Press here.
Photo by Andi Ikmal on Unsplash
