Starbucks is set to close dozens of cafés and slash 900 jobs in a dramatic £750 million restructuring drive designed to revive the struggling coffee giant.
Chief executive Brian Niccol revealed the overhaul in a letter to staff on Thursday, confirming that underperforming stores across North America and the UK would be shut as the world’s biggest coffee chain battles slowing sales. The company would not say how many British outlets face closure, but warned the action was “significant” and would hit both staff and customers.
“This is a more significant action that we understand will impact partners and customers,” Niccol wrote. “Our coffee houses are centres of the community and closing any location is difficult. I know these decisions impact our partners and their families and we did not make them lightly.”
The sweeping plan includes the closure of more than 100 stores in North America, while 900 “non-retail” roles will be axed globally. Starbucks said it would instead focus on upgrading existing outlets with redesigned interiors, more staff hours and enhanced service.
The Seattle-based chain has struggled with a cocktail of problems: slowing demand, boycotts in the Middle East, worker strikes in the US, and fierce competition in the UK from rivals like Gail’s and Greggs. In Britain, Starbucks sales fell from £548m to £526m last year, while losses deepened to £36.2m.
Despite the cutbacks, Starbucks plans to open 80 new UK stores this year, even as others shut. The group employs 5,500 people across more than 500 company-owned stores in Britain.
Niccol, the former boss of Chipotle, was brought in last year to engineer a turnaround. But he has faced backlash over his lucrative $113m pay package and use of a private jet to commute from California to Seattle. Since his appointment, Starbucks shares have dropped by 12 per cent.
The shake-up follows mounting pressure from activist investors and criticism over the chain’s high prices. Global sales fell 2 per cent in the most recent quarter, while the company’s Middle Eastern franchisee was forced to lay off thousands amid boycotts linked to the conflict in Gaza.
In the UK, Starbucks is being squeezed at both ends: premium rivals offering artisanal coffee and cheaper competitors winning budget-conscious consumers.
Unveiling the plan, Niccol said: “We’re investing in green apron partner hours, more partners in stores, exceptional customer service, elevated coffee house designs and innovation to create the future.”
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Starbucks to shut cafés and axe 900 jobs in £750m rescue plan as sales slump and UK losses mount