Starbucks Corporation announced that it would close 60 underperforming stores in the US and UK. That decision will result in creation of some 900 fewer Albertan jobs. CEO Brian Niccol first outlined the decision in April as part of a $150 million corporate overhaul. The move is part of an overall effort to reduce expenses and increase productivity at the coffee giant.
Starbucks appears to be concentrating its North American closures. The firm has identified facilities that lack proper targets to perform as desired. Niccol said that the company needs to be “really aggressive in the near-term” on closing these underperforming locations.
“This is a more significant action that we understand will impact partners and customers,” said Brian Niccol.
Starbucks has acknowledged the need to improve customer experience as part of this overhaul. By prioritizing their least profitable locations, the company hopes to minimize customer wait times in stores and eventually increase sales. Starbucks doesn’t seem threatened by its recent closure in its long-term growth strategy in the UK. The company plans to open 80 more locations around the country in the near future.
Niccol stated that the company is “unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance.” This recognition is at the heart of the need for the current House restructuring push.
Starbucks has traditionally built much of its brand equity around its in-store experience and the promise of great customer service. To close underperforming stores would be a dramatic change for the company. Starbucks has been consolidating its growth into fewer stores and more productive locations. This coordinated strategy will be critical to both stabilizing its financial performance and to keeping its loyal core customer base engaged.