Starbucks will reportedly close more than 100 North American stores and lay off roughly 900 workers as part of a sweeping $1 billion restructuring plan.
The Seattle-based coffee chain announced that it will shutter nearly 1% of its company-operated stores in the U.S. and Canada by the end of its fiscal year, a move that leaves roughly 18,300 outlets in operation and marks one of its most significant restructures to date, according to CNBC.
Starbucks CEO Brian Niccol wrote in a letter to employees that these closures will target company-owned locations where the physical environment customers expect cannot be created or where the stores are no longer financially viable.
“These steps are to reinforce what we see is working and prioritize our resources against them,” Niccol wrote, per CNBC.
“I believe these steps are necessary to build a better, stronger, and more resilient Starbucks that deepens its impact on the world and creates more opportunities for our partners, suppliers, and the communities we serve.”
Closing stores is not uncommon in the food service industry, but Niccol has clarified that this restructuring is different and much more significant than previous moves by the company.
“This is a more significant action that we understand will impact partners and customers. Our coffeehouses are centers of the community, and closing any location is difficult,” he said, per CNN.
Niccol added that the company will attempt to transfer workers from closing stores to other locations whenever possible, with severance packages being provided where this is not feasible.
This restructuring comes as Starbucks has faced a slowdown in same-store sales for six consecutive quarters, amid rising pressure from consumers and intensifying competition.
As previously reported by The Dallas Express, Niccol has taken multiple steps to improve production at Starbucks locations, including simplifying the coffee shop’s menu to help reduce overall costs.
Similarly, the business implemented a new store policy that prevents non-paying customers from using the restrooms or loitering inside the location, with paying customers also receiving additional perks as a result.
This drastic action has prompted many to wonder whether the company will be able to survive financially. Still, Niccol said in July that the Starbucks turnaround is actually ahead of schedule.
“While our financial results don’t yet reflect all the progress we’ve made, the signs are clear — we’re gaining momentum,” he said, per CNBC.