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Starbucks is shutting down 250 locations this week

Starbucks is closing roughly 250 coffeehouses across North America this week as the company reviews its store portfolio. ©Image Credit: Unsplash / Athar Kha

Starbucks is closing roughly 250 coffeehouses across North America this week, in the latest round of cuts under CEO Brian Niccol’s “Back to Starbucks” turnaround plan. While that sounds like a huge number, but Starbucks says the closures represent about 1% of its more than 18,000 North American locations. While most of the company’s stores are performing well, the locations being closed are reportedly struggling financially or aren’t delivering the experience Starbucks wants for customers and employees.

Starbucks is still trying to grow

Starbucks is not done opening stores—in fact, it is doing the exact opposite. As COO Mike Grams revealed, the company remains committed to expanding its North American footprint. Starbucks is also speeding up renovations, with plans to complete 1,500 coffeehouse “uplifts” by the end of its fiscal year on Sept. 30.

The idea behind the makeover is to make Starbucks stores feel more welcoming, improve service and give the company a clearer picture of which locations are worth keeping. That review apparently was not great news for 250 of them. Starbucks said employees at affected stores will be offered transfers to other locations where possible. Those who cannot be placed elsewhere will receive severance support.

This is not Starbucks' first major round of closures under Niccol. The company shut down 627 stores in North America and Europe last September, along with cutting 900 non-retail jobs. It also laid off another 300 corporate employees in May.

The Florida lawsuit

Just one week before announcing the store closures, Starbucks settled a lawsuit brought by Florida Attorney General James Uthmeier over the company's diversity, equity and inclusion policies. Florida had alleged that Starbucks' workplace policies used race- and sex-based goals, quotas and preferences in areas including hiring, promotions and compensation. Starbucks denied wrongdoing and settled the case without admitting liability.

Under the settlement, Starbucks agreed to comply with Florida's civil rights law and pay $1 million to the Florida Department of Legal Affairs. It also agreed to submit annual compliance certifications for four years. The agreement applies nationwide, according to Florida officials and Reuters.

In all of this, there is no evidence that the DEI settlement caused this week's store closures. Starbucks itself has stuck to the explanation of store performance and its “Back to Starbucks” strategy.

Source: Fox Business

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