Starbucks Plans to Close Hundreds of US, Canada, and European Stores and Lay Off 900 Nonretail Employees
The layoffs according to Chief Executive Officer Laxman Narasimhan, is a strategic pivot aimed at improving the company's financial health.
Starbucks is planning a major organizational restructuring that includes laying off approximately 900 nonretail employees in the coming weeks and closing hundreds of underperforming stores across the US, Canada, and Europe, according to the Associated Press.
In a communication to staff, CEO Laxman Narasimhan confirmed the job cuts will affect roles outside of the stores and stated the company is prioritizing streamlining its operations and improving financial performance in a challenging economic climate.
"The company wouldn’t give a number of stores that are closing, but the bulk of the closures appear to be in the U.S. and Canada. Starbucks said it expects to have 18,300 North American locations when its fiscal year ends on Sunday. As of June 29, the company had 18,734 locations," said the report.
The move to shutter underperforming company-operated locations in the United States and Canada is part of a broader effort to streamline the company's retail footprint.
The company is actively focusing on expanding its licensed locations, which are typically found inside grocery stores, airports, and other high-traffic venues. This shift allows Starbucks to grow its brand presence with lower operational overhead.
The planned job cuts will affect employees primarily in non-store roles, according to the CEO's statement. Narasimhan stated that the layoffs are a necessary step to better align the company’s costs and improve its effectiveness in a challenging economic environment.
The letter did not specify the exact number of positions to be eliminated but emphasised that the changes are part of a continuous process to simplify the organisation.
The announcement comes after a period of increasing pressure on the coffee giant, which has been grappling with higher labor costs, unionisation efforts in some stores, and softening consumer demand. By focusing on cost-saving measures and optimising its store portfolio, Starbucks is attempting to restore investor confidence and enhance long-term profitability. Narasimhan assured employees that the company is committed to supporting those affected by the layoffs with severance packages and assistance in finding new roles.
