Starbucks said Thursday it’s closing hundreds of U.S. and Canadian stores — including several in Chicago — and laying off 900 nonretail employees as it focuses more of its resources on a turnaround.
The Seattle coffee giant said store closures would start immediately. Starbucks said affected baristas will be offered severance packages and transfers to other locations where possible.
The company wouldn’t give a number of stores that are closing but said it expects to have 18,300 North American locations when its fiscal year ends on Sunday, which is 124 fewer than it had at the end of its 2024 fiscal year. As of June 29, the company had 18,734 locations.
In a research note Thursday, TD Cowen analyst Andrew Charles estimated Starbucks will close around 500 North American stores in its fiscal fourth quarter.
The company’s Edgewater store, at 5964 N. Ridge Ave., is among the locations closing Saturday, according to Starbucks Workers United. The labor group represents 12,000 baristas and recently won its 650th union election.
Workers picketed outside the Edgewater store on Thursday morning. The rally was planned before Starbucks’ announcement. Workers had aimed to press for a fair contract with the company.
In December, Starbucks workers went on strike in three U.S. cities, including Chicago, to protest the lack of progress in contract negotiations with the company. They included baristas at the North Ridge Avenue store. Workers also went on strike at the Bucktown store at Armitage and Hoyne avenues, as well as in Evanston on Main Street.
Diego Franco works at a Starbucks store in Des Plaines and has been a barista, trainer and manager in his six years with the company. On Thursday, he joined fellow workers at the “practice picket” outside the Edgewater store.
Franco heard about the store closures and layoffs on Thursday morning but wasn’t surprised. Shutting stores is “another tactic out of the same textbook that Starbucks follows,” he said. “They want their bottom line to look good for investors.”
“Workers are fed up and willing to do whatever it takes to get the company back to the negotiating table. This fight has been going on for over four years now. We’ve out-organized our past four CEOs,” Franco said. “It’s workers in the stores that truly hold the power.”
As of Friday morning, the company’s website noted which Chicago stores would be closing, with at least three of them unionized. A Starbucks spokesperson said a store’s unionized status “is not a factor when we consider whether to close a store.”
The following stores were set to close Friday:
- 131 S. State St., Loop
- 209 W. Jackson Blvd., Loop
- 151 N. Michigan Ave., Loop
- 1520 W. Harrison St., Near West Side
- 120 S. Riverside Plaza, West Loop
These locations will close Saturday:
- 5964 N. Ridge Ave. (unionized), Edgewater
- 1174 E. 55th St. (unionized), Hyde Park
- 116 S. Halsted St. (unionized), West Loop
- 1588 N. Milwaukee Ave., Wicker Park
- 1599 N. Clybourn Ave., Old Town
- 1430 W. Taylor St., Near West Side
- 111 E. Chestnut St., Streeterville
- 3232 W. Foster Ave., North Park
- 9438 S. Ashland Ave., Washington Heights
- 1730 W. Fullerton Ave., Lincoln Park
In a letter sent to employees Thursday, Starbucks Chairman and CEO Brian Niccol said a review of the company’s stores identified locations where the company doesn’t see a path to financial stability or isn’t able to create the physical environment customers expect. Those stores are being closed.
“Each year, we open and close coffeehouses for a variety of reasons, from financial performance to lease expirations,” Niccol wrote. “This is a more significant action that we understand will impact partners and customers. Our coffeehouses are centers of the community, and closing any location is difficult.”
Starbucks said it expects to spend $1 billion on the restructuring, including $150 million on employee separation benefits and $850 million related to the physical store closings and the cost of exiting leases.
It was not immediately clear how many of the stores that are closing are unionized. Workers at 650 company-owned U.S. Starbucks stores have voted to unionize since 2021, but they have yet to reach a contract agreement with the company.
Starbucks Workers United said Thursday that the closures were made without input from baristas. The union said it intends to engage in bargaining at every union-represented store that is closing to ensure workers can be placed at another store they prefer.
“Fixing what’s broken at Starbucks isn’t possible without centering the people who engage with the company’s customers day in and day out,” the union said.
News of the store closures came just over a week after unionized employees in three states sued Starbucks over its new dress code, saying the company refused to reimburse workers who had to buy new clothes.
Starbucks plans to increase its North American store count in its next fiscal year, Niccol said. The company also plans to redesign more than 1,000 locations in the next 12 months to give them a warmer, more welcoming feel.
This is the second round of layoffs at Starbucks this year. In February, Niccol announced the layoffs of 1,100 corporate employees globally and eliminated several hundred open positions. At the time, he said Starbucks needed to operate more efficiently and increase accountability for decisions.
Niccol is a turnaround specialist who was brought into Starbucks a year ago this month to give the brand a jolt. Under Niccol’s leadership, the struggling Chipotle chain, where Niccol was CEO for about six years, essentially doubled its revenue and its profit, and its stock price soared.
In July, Starbucks reported its sixth straight quarter of lower same-store sales, as weak U.S. traffic continued to be a drain on the company. Niccol is trying to turn that around by adding staff, making stores cozier and introducing software that helps prioritize orders and makes sure customers can get their drinks within four minutes.
Contributing: AP