Starbucks to close cafés and cut 900 jobs

Starbucks is set to close dozens of cafés and eliminate 900 jobs as part of a significant £750 million restructuring initiative aimed at revitalising the struggling coffee giant. In a letter to staff on Thursday, Chief Executive Brian Niccol confirmed that underperforming stores across North America and the UK would be closed as the company contends with declining sales. While the exact number of UK outlets facing closure was not disclosed, the company indicated that the impact would be substantial for both employees and patrons.

Niccol stated, “This is a more significant action that we understand will impact partners and customers. 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 comprehensive plan involves the closure of more than 100 stores in North America, with 900 “non-retail” roles being cut globally. Starbucks intends to focus on upgrading existing locations by redesigning interiors, increasing staff hours, and enhancing service.

The Seattle-based chain is grappling with a range of challenges, including declining demand, boycotts in the Middle East, worker strikes in the US, and intense competition in the UK from rivals like Gail’s and Greggs. In the UK, Starbucks saw sales decline from £548 million to £526 million last year, with losses deepening to £36.2 million.

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, who previously led Chipotle, was appointed last year to drive a turnaround. However, he has faced criticism over his substantial $113 million pay package and use of a private jet for commuting between California and Seattle. Since his appointment, Starbucks shares have fallen by 12 per cent.

The restructuring comes amid increasing pressure from activist investors and criticism over the chain’s high prices. Global sales fell by 2 per cent in the most recent quarter, and the company’s Middle Eastern franchisee was forced to lay off thousands due to boycotts linked to the conflict in Gaza.

In the UK, Starbucks faces challenges from both premium rivals offering artisanal coffee and cheaper competitors appealing to 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.”