In a significant shift for the coffee industry, Starbucks is preparing to close hundreds of its U.S. locations, a move that is part of a larger restructuring plan initiated by new CEO Brian Niccol. The closures have begun to take effect, with signs appearing at various locations, including several in the Chicago area, announcing the store shutdowns.
One such sign at a Starbucks in Glencoe read, “We’ve made the incredibly difficult decision to close this Starbucks location. We know this may be hard to hear – because this isn’t just any store. It’s your coffeehouse.” This sentiment is echoed across other affected stores within the city and suburbs as customers grapple with the impending loss of their local coffee spots.
While Starbucks has not released a detailed list of the specific locations slated for closure, a company spokesperson mentioned that notices will be posted at the affected stores and emails will be sent to notify customers. The company’s decision comes as they implement their “Back to Starbucks” strategy, designed to enhance performance and streamline the customer experience amidst a backdrop of declining sales.
The fiscal report from June noted that Starbucks operated 17,230 locations in the U.S. and over 41,000 globally. The store closures are anticipated to lead to a significant drop in this number, with estimates indicating a potential $1 billion in restructuring costs. Accompanying the downsizing will be the elimination of 900 corporate positions, along with layoffs affecting an unknown number of retail employees. Niccol reassured employees in a recent letter that efforts are being made to facilitate transfers to nearby stores where possible, as well as offering comprehensive severance packages to those unable to relocate.
Amid a challenging sales environment — North American same-store sales saw a 2% decline in the third quarter — Niccol pointed out that the closures are aimed at underperforming stores, where the physical environment does not meet customer expectations, or financial viability is lacking. He suggested that the company would end the fiscal year with about 18,300 locations in North America, down from 18,734.
The closures have stirred backlash, particularly from Starbucks Workers United, which represents over 12,000 baristas nationwide. The union, formed in 2021, has yet to finalize a contract with Starbucks and is vocal about its dissatisfaction with the leadership’s direction. Protests have erupted at targeted locations, including a rally held in Chicago’s Edgewater neighborhood where workers gathered to voice their concerns.
As the Glencoe store prepared for its final day, customers flocked in for one last cup of coffee and a bittersweet farewell to their beloved baristas. The atmosphere was heavy with nostalgia as regulars reflected on the community feeling the store had fostered. One customer, Jennifer Balestrery, lamented the loss, expressing her disappointment while acknowledging the presence of other local coffee shops, stating, “I do love Hometown, don’t get me wrong, but there’s room in this town for both.”
As Starbucks embarks on this challenging transition, the impact on both employees and communities is palpable, leaving many to question what the future holds for the iconic coffee chain.
