Can Starbucks $1 Billion Restructuring Plan Fix the Coffee Giant's Slump?

"Niccol's "Back to Starbucks" plan aims to r efocus the company on its original strengths : quality coffee and a welcoming in-store experience. The restructuring includes reducing the menu by 30% by the end of fiscal 2025, streamlining offerings to prioritize popular items like core coffee drinks. Under the just-announced restructuring plan , Starbucks will close approximately 500 underperforming stores in the U.S. and Canada, about 1% of its company-owned locations."

"However, a recently announced $1 billion restructuring plan, involving store closures and layoffs, suggests the company's challenges are more complex than anticipated. After six consecutive quarters of declining same-store sales , including a 2% drop in the U.S. driven by a 2% decline in transactions, Starbucks is under pressure to rethink its approach and return to its core identity. This includes the Seattle Roastery, which opened in 2014 as a premium coffee destination but is now seen as unprofitable despite its unique design and high-end offerings."

Starbucks faces prolonged challenges from shifting customer preferences, increased competition, and pandemic disruptions, leading to declining sales. Brian Niccol became CEO in late 2024 after success at Chipotle, prompting investor optimism. A $1 billion restructuring includes closing about 500 underperforming U.S. and Canada company-owned stores, cutting corporate staff, and taking lease termination charges and severance. The company will reduce its menu by 30% by fiscal 2025 to prioritize core coffee drinks and simplify operations. The Seattle Roastery will close as part of cuts. The company seeks to refocus on quality coffee and the in-store experience to stabilize performance.

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