Starbucks to Shut Dozens of Stores and Cut Jobs Amid Turnaround Plan

Starbucks is embarking on a sweeping restructuring initiative, closing scores of cafes in the UK and North America while axing 900 non-retail roles, in a bid to revive the fortunes of the global coffee chain. The strategy, announced by Chief Executive Brian Niccol, has been prompted by waning sales, increased competition, and mounting operational costs.

The company will shutter over 100 outlets across North America, alongside an unspecified number of sites in the UK. Starbucks currently owns more than 500 outlets in Britain – excluding franchise locations – and employs over 5,500 staff in the region. While the firm confirmed a commitment to launching 80 new UK stores this year, certain underperforming or less inviting branches are set to close as a direct output of the overhaul.

Mr Niccol, previously recognised as the turnaround specialist behind Chipotle’s resurgence, outlined that locations unable to provide a welcoming environment or generate robust financial results face closure. The plan is projected to cost approximately $1bn (£750m), with a core focus on upgrading existing stores to enhance ambience, service and customer experience. Niccol noted the impact these decisions have on employees and communities, acknowledging the difficulty in shuttering community hubs.

Since Niccol’s appointment last year, Starbucks’ share price has declined by roughly 12 per cent. His pay package has drawn investor scrutiny, valued as much as $113m and significantly outstripping that of his predecessor. This, combined with headlines surrounding his refusal to relocate from Newport Beach to Seattle and reliance on a company jet, has compounded public debate over leadership choices.

Starbucks has grappled with activist investors, rising operating costs and a string of boycotts linked to controversies over its purported business stances. Declining sales in the Middle East have triggered redundancies among franchise partners, while US staff have engaged in industrial action relating to pay and working conditions. In the UK, challenges from both upscale coffee competitors like Gail’s and budget-oriented chains such as Greggs have intensified pressure on Starbucks’ position.

Financially, the company’s latest British accounts documented a fall in sales from £548 million to £526 million for the year ending 29 September 2024, accompanied by a pre-tax loss of £36.2 million. Globally, Starbucks registered a 2 per cent drop in sales for the quarter to June 29. The restructuring aims to reposition the company in a rapidly evolving market, emphasising innovation, elevated store design, and superior customer service to regain momentum.