New restructuring at Starbucks

Starbucks is closing branches in the United States and Canada and cutting 900 jobs in a one billion US dollars (about 930 million euros) restructuring. After that, the coffee chain plans to resume growth and renovate 1,000 stores.

Unprofitable locations

The coffee company is dropping the number of locations in the United States and Canada by 1% this fiscal year to 18,300. Then Starbucks plans to expand and renovate another 1,000 stores again. An internal review concluded that some locations cannot become profitable. Starbucks is therefore focusing on locations that fit within CEO Brian Niccol’s new strategy of making cafes more attractive.

In a letter to staff, however, the top executive writes that initial improvements are causing customers to come more often, stay longer and leave positive feedback. He needs to turn the tide after six consecutive quarters of declining sales. His plan focuses on more seating and additional outlets in the cafes. So far, those changes are not producing a major effect on financial results. Starbucks recently posted sales and profits below expectations. The chain is experiencing increasing competition in its two main markets, the United States and China. This is already the second round of layoffs under Niccol’s leadership after more than a thousand jobs were eliminated earlier this year.