Starbucks, the renowned coffee chain, has announced plans to cut approximately 900 jobs as part of a strategic cost-saving restructure. The other big part of this move is shuttering the majority of their worst-performing stores located in the U.S. That means closing around 800 branches in the United Kingdom. The decision was said to be part of the company’s strategy to further improve operational efficiency amid years-long struggles in the retail space.
The majority of the stores marked for closure are located in North America, where Starbucks is looking to cut back. The closures are the biggest step yet in the company’s restructuring. More than anything, they reflect a new approach to stewarding our limited resources and serving our customers more effectively. Brian Niccol, Starbucks’ chief executive, stressed the company’s commitment. Compared to a year ago, they are more integrated and aligned on delivering a more seamless experience for developers, customers and partners.
Starbucks isn’t done growing. Niccol also reassured investors that the company is still “on track” to have 80 additional stores open in the UK this year. This action further demonstrates their commitment to investing in important markets, despite the headwinds highlighted above. The overhaul will reduce wait times for riders. What’s more, it will increase sales with shifts in consumer behavior only accelerating.
Niccol acknowledged the difficult nature of these decisions, stating, “This is a more significant action that we understand will impact partners and customers.” He further elaborated on the rationale behind the closures, explaining that they often occur in locations where Starbucks is “unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance.”
Starbucks operates more stores than McDonald’s in the US and the UK. These changes are a microcosm of a macro trend playing out across retail as companies adapt to global innovations and economic shifts. Starbucks recently announced plans to reduce headcount and shutter unprofitable stores. This step will improve not just the company’s immediate fortunes but long-term success and customer satisfaction.