What the Starbucks Restructuring Means for Coffee Culture

Starbucks has announced a $1 billion restructuring plan that closes underperforming company-operated stores and cuts jobs. A filing with the US Securities and Exchange Commission puts $150 million toward employee severance and $850 million toward lease terminations and asset disposals, with most closures done before the end of fiscal year 2025. Hundreds of shops in the US and Canada are affected.

The first Seattle Roastery, open since 2014 on Capitol Hill, closes permanently, along with the SODO Reserve store at headquarters. About 900 non-retail employees receive layoff notices, the second such round under CEO Niccol. Stores in the UK, Switzerland and Austria also close after a portfolio review, while the EMEA business otherwise proceeds as planned.

Starbucks recently announced the launch of a restructuring plan totaling $1 billion, involving the closure of underperforming company-operated stores and a new round of layoffs. According to a filing submitted to the U.S. Securities and Exchange Commission, most of the store closures will be completed before the end of fiscal year 2025, with $150 million for employee severance and $850 million covering lease terminations and asset disposals. CEO Niccol said in an open letter to employees that some stores failed to meet financial targets or create the environment customers expect, so the decision was made to immediately close some stores in North America. Foreign media reported that the restructuring will affect hundreds of coffee shops in the United States and Canada, including the world's first Roastery in Seattle's Capitol Hill and the SODO Reserve store in the company's headquarters building. This Roastery, which opened in 2014, is not only a must-visit spot for Starbucks fans but also one of the first unionized stores in the brand's history, and its sudden permanent closure has sparked employee speculation about union suppression. Meanwhile, about 900 non-retail employees will receive layoff notices, marking the second round of layoffs since Niccol took office. Although the Europe, Middle East and Africa business is progressing as planned, some stores in the UK, Switzerland and Austria will also close due to a portfolio review.

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Recently, CNN, the Associated Press and several other U.S. media outlets reported that Starbucks, the world-renowned coffee chain giant, announced the launch of a $1 billion restructuring plan, closing some underperforming company-operated stores and proceeding with layoffs.

According to reports, a filing Starbucks submitted to the U.S. Securities and Exchange Commission (SEC) on the 25th shows that the company plans to complete most of the store closures before the end of fiscal year 2025, and estimates that the store closures, support organization transformation and other restructuring activities will cost $1 billion, of which $150 million is for employee severance and $850 million is for store closure-related costs including lease terminations and asset disposals.

In an open letter to employees, Starbucks CEO Niccol said that during the company's review, it found that some stores failed to meet financial targets or create the environment customers expect, so it decided to close some stores in North America, effective immediately.

Although Starbucks did not disclose the exact number of stores to be closed, foreign media reported that the restructuring plan will close hundreds of coffee shops in the United States and Canada, including its world's first Roastery in Seattle's Capitol Hill and the SODO Reserve store in the company's headquarters building.

Public information shows that the Starbucks Seattle Roastery opened in 2014 and is one of the must-visit spots for many Starbucks fans when they arrive in Seattle. But judging from pictures shared by U.S. netizens, a closure notice has now been posted at the entrance of this Roastery, which holds special significance for Starbucks, the store windows have been boarded up with black planks, drawing many passersby to stop and look, and a notice that the store has closed has also appeared on Google Maps.

It is worth mentioning that the Seattle Roastery is also one of the first unionized stores in the brand's history, and union members once held protest marches here. So regarding the store's permanent closure without warning, some employees suspect it was done by the company to suppress union organizing.

Starbucks Workers United, the union representing Starbucks employees, said in a statement, "Once again, we have experienced new policies and major decisions being made without baristas at the table," revealing that union stores are "overrepresented" on this closure list, and saying it plans to send a formal request to the company asking it to provide information on the closures and assist every store's employees with transfers.

At the same time, media reports also mentioned that about 900 non-retail employees will receive notices on Friday that they have been laid off by the company, and this is also the second round of layoffs at Starbucks since Niccol became CEO. In February this year, Starbucks had already laid off 1,100 corporate employees. In response, the brand said the move was intended to further reduce non-retail staffing and related expenses.

However, this unusually large wave of Starbucks store closures is not limited to North America; stores far across the ocean in Europe may also be affected.

British media outlets such as the BBC reported that Starbucks revealed, "While the Europe, Middle East and Africa business is progressing as planned, and we expect to open 80 new stores in the UK this fiscal year and 150 new stores across Europe, the Middle East and Africa, some stores in the UK, Switzerland and Austria will close as a result of this portfolio review."

Image source: Internet

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