Starbucks will close hundreds of coffee shops and lay off 900 non-retail employees as part of an attempt to revive falling sales.
The cuts are mainly focused in the US and Canada, but will also include an unspecified number of closures in the UK.
Starbucks operates around 500 company-owned stores in the UK, in addition to franchise outlets, and previously announced plans to open 80 more this year.
The coffee chain will look to revive remaining locations by adding seating and electrical outlets to encourage customers to come more often and for longer.
Brian Niccol, the company’s CEO, wrote to employees on Thursday outlining the plans. “Coffee houses 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, these locations will be closed.”
The plan is expected to cost around $1bn (£750m) due to severance packages and long-term rental contracts.
The job cuts are Starbucks’ second big round of layoffs this year after it axed 1,100 positions in February.
It comes the world’s biggest coffee chain battles slowing sales due to high prices and strong competition, reporting six consecutive quarters of falling same-store sales.
In the UK, it is battling competition from chains such as Pret a Manger and Greggs and saw its sales fall from £548m to £526m in the year to 29 September 2024.
Niccol was brought in last year to turn the business around by improving service and revitalising its stores, but the company’s share price is now down around 12% since he joined.
The latest announcement had little impact on the market, with Melius Research analyst Jacob Aiken-Phillips stating the turnaround “still has a long way to go” and will not “address that their prices have just gotten way too high”.
No comments yet