Starbucks, once the proud symbol of American coffee culture, is sadly shrinking. CEO Brian Niccol revealed on Thursday that the company will close underperforming facilities and cut 900 positions as part of a $1 billion restructuring plan. The move underscores not only the coffee chain’s financial challenges, but also the rising cost of overexpansion, mistaken priorities, and expanding competition, which has eroded the company’s dominance.
A Costly “Back to Starbucks” Plan
The revamp is part of Niccol’s “Back to Starbucks” effort, which aims to lure customers back through the doors. However, the concept comes with a high price tag: $1 billion. Approximately $450 million will be spent breaking leases on shuttered stores, while $150 million would go towards severance and expenditures associated with laying off 900 “nonretail” personnel. The change demonstrates how thoroughly Starbucks has been pushed to reconsider its business model.
Despite being profitable, Starbucks’ sales have decreased significantly. Rivals such as Dunkin’ Doughnuts are pulling away budget-conscious customers, while smaller coffeehouses are gaining momentum by providing more personalized experiences.
Cutting Back After Years of Expansion
Starbucks grew at a dizzying pace for years, with outlets on almost every corner in cities and suburbs. However, the chain’s growth has finally caught up. The corporation closed fiscal year 2024 with 18,424 sites in North America. By the end of 2025, that figure will have shrunk by around 1%, indicating a rare decrease in the coffee giant’s footprint.
In a message to employees, Niccol conceded that many stores were no longer meeting customer or employee expectations. “We identified coffeehouses where we’re unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance, and these locations will be closed,” the CEO wrote.
The Human Cost
Beyond numbers and leases, the change will have a personal impact. Nine hundred employees, mostly in corporate and support roles, will lose their employment. While Starbucks has not revealed the specific locations of the shutdown, both employees and customers are ready for inconvenience. The downsizing marks a shift from the company’s previous unlimited optimism to a moment of contraction.
Critics disagree with Starbucks’ leadership priorities. While the chain has relied significantly on progressive branding and political messaging over the years, customers have progressively shifted to competitors who provide affordability and consistency.
Trouble Brewing for the Brand
Starbucks’ problems go beyond finances. According to analysts, the brand has lost some of its cultural popularity, with younger buyers preferring trendier or locally sourced alternatives. At the same time, persistent discussions regarding labour organising, business policy, and politicised branding have alienated some of its customers.
Starbucks’ recent cuts may buy more time, but they also show the empire’s limitations. Starbucks was once regarded as an emblem of American convenience and aspirational coffee culture, but it now faces a sobering reality of how customer loyalty cannot be taken for granted.
