Starbucks is slashing 900 jobs and shutting down about 100 cafes across North America in a $1 billion restructuring plan, the company announced Thursday. The sweeping cuts come as the coffee giant reels from six consecutive quarters of falling U.S. sales, consumer backlash over high prices, and intensifying union battles. The company, which already cut 1,100 corporate jobs earlier this year, is also halting many vacant hires as part of its effort to reverse six straight quarters of declining U.S. sales. The move underscores both consumer pushback to rising prices and mounting pressure from labor unions.
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Restructuring Plan Unveiled
The coffee giant revealed that the latest cuts will primarily affect “non-retail” positions. About 1% of its North American cafes are set to close, with the company projecting $150m in employee separation costs and $850m in store closure expenses. Starbucks executives framed the restructuring as a realignment of resources aimed at boosting efficiency and restoring growth.
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CEO Brian Niccol’s Message
In a letter to employees, CEO Brian Niccol explained that the changes were designed to “reinforce what we see is working and prioritize our resources against them.” He added: “I believe these steps are necessary to build a better, stronger, and more resilient Starbucks that deepens its impact on the world and creates more opportunities for our partners, suppliers, and the communities we serve.” Niccol acknowledged the impact on employees and their families but insisted the decision was made with long-term stability in mind.
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Union Condemns Move
Starbucks Workers United, which represents staff at hundreds of stores, criticized the cuts. In a statement, the union said the restructuring “makes it clear things are only going backwards.” It argued that lasting improvements at Starbucks are impossible without “centering the people who engage with the company’s customers day in and day out.” The union has been at odds with Starbucks leadership over pay, working conditions, and the company’s approach to contract negotiations.
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Sales Decline Continues
The decision follows six consecutive quarters of falling U.S. sales, as many customers rethink buying expensive coffee amid years of inflation. The slump has raised concerns about Starbucks’ business model and its ability to retain consumer loyalty at premium prices. Shares of Starbucks dropped 1% following Thursday’s announcement, signaling investor concern over the company’s performance.
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Store Design Investments
Despite closures, Starbucks said it plans to upgrade over 1,000 store locations in the coming year. Niccol described the initiative as an effort “to introduce greater texture, warmth and layered design,” aiming to enhance customer experience and differentiate Starbucks’ cafes from lower-cost competitors. The company stressed that while some locations will close, others will be modernized to attract more foot traffic.
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Union Disputes Persist
More than 650 Starbucks stores across the U.S. have unionized, with workers pushing for a first contract. Talks have repeatedly stalled since Niccol took over as CEO in September last year. Tensions escalated in December when the union staged its largest-ever strike at the company. Workers have threatened additional walkouts unless Starbucks commits to serious bargaining, while the company has maintained it remains open to negotiations.
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Employee Impact Acknowledged
Niccol emphasized in his letter that the cuts were not made lightly. “I know these decisions impact our partners and their families, and we did not make them lightly,” he said. However, the union and its members continue to argue that the restructuring prioritizes financial performance over the well-being of Starbucks’ frontline workforce, leaving open the possibility of more strikes in the months ahead.