New York
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The days of a Starbucks on every corner seem to be coming to an end.
For years, Starbucks staked its reputation on its ability to expand relentlessly in cities and suburbs. Comedian Lewis Black even riffed in 2001 that the “end of the universe” was in Houston, Texas, where he found one Starbucks directly across the street from another.
But both the universe – and Starbucks – have changed since then. More competition, inflation and consumer shifts have hurt Starbucks’ bottom line.
Starbucks announced Thursday that it will close 1% of its stores in North America this month. The closures – and layoffs of 900 corporate employees – are part of a $1 billion restructuring plan. Starbucks CEO Brian Niccol said the stores it will shut weren’t “what our customers and partners expect” or weren’t making money.
Closing roughly 400 stores is like a rounding error for the coffee giant, which has more than 32,000 locations worldwide. And it still plans to open new stores next year. But the fact that Starbucks is shrinking right now represents something significant for its business.
Starbucks’ closures were driven by consumers who moved away from urban centers during the Covid-19 pandemic, said RJ Hottovy, an analyst at Placer.ai, a firm that tracks foot traffic. The chain is now shedding leases in areas that have notably less business.
Starbucks is also getting squeezed by independent coffee shops, growing chains like Blank Street Coffee and Blue Bottle, and drive-thru companies such as Dutch Bros.
And customers have balked at the chain’s prices. More than 70% of people blamed higher prices for why they planned to visit Starbucks less over the next 12 months, a recent UBS survey of 1,600 consumers found. Starbucks is struggling the most with people making under $100,000, the survey found.
Starbucks’ turnaround has been “made more challenging by ongoing macroeconomic uncertainty and the rapid expansion of drive-thru-focused competitors,” Hottovy said.
Starbucks is attempting a comeback under Niccol after years of struggles, strategy missteps and a revolving door of CEOs.
Starbucks’ sales at stores open for at least a year have dropped for six straight quarters. Its stock has dropped roughly 9% so far this year.
Investors and analysts have a high view of Niccol, who previously revitalized Chipotle and Taco Bell. He took over at Starbucks in September 2024 and received nearly $100 million in compensation last year.
Niccol is trying to reposition Starbucks once again as a “third place” between home and work. The company had veered too much into mobile orders and it “took a lot of the soul” out of the brand, he said this year.
Under Niccol, Starbucks has brought back its tradition of baristas doodling on cups in Sharpie pens; reinstated self-serve milk and sugar stations; cut 30% of the food and drink menu; ended its open-bathroom policy for non-paying customers; and laid off 1,100 corporate employees in February.
The chain is also trying to win back customers looking to sit down for a cup of coffee by renovating 1,000 stores — 10% of its company-owned US locations — with chairs, couches, tables and power outlets over the next year. Starbucks aims to make changes to all of its US stores within the next three years.
However, some workers have complained about the changes, including complicated new drinks causing stress during rush hours and a bottleneck of cups to doodle on.
Analysts, however, believe Starbucks is moving in the right direction and will be able to achieve a turnaround under Niccol.
“We acknowledge the turnaround has taken longer than we expected, now likely moving into early-to-mid 2026,” BTIG analyst Peter Saleh said in a recent report. But he sees signs of progress in Niccol’s initiatives.
“We think once these start working, the impact will be significant,” Saleh said.
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