• Starbucks plans to close 1% of its North American stores.
• The closure will affect approximately 900 non-retail employees.
• This restructuring effort is part of a $1 billion turnaround plan.
• CEO Brian Niccol aims to revitalize customer experience in stores.
• The company is facing a decline in sales over recent quarters.

Starbucks announced its decision to close about 1% of its North American locations and eliminate 900 non-retail jobs as part of a major restructuring effort. The closures, which amount to over 120 stores, are targeted at underperforming locations, according to CEO Brian Niccol. He stated that these actions are necessary to create a better physical environment that meets customer expectations and financial goals, reflecting his strategy to enhance the coffeehouse atmosphere that many customers have come to expect, according to Business Insider and Reuters.

The total number of Starbucks locations in North America will decrease to approximately 18,300 by the end of fiscal year 2025. This is part of a larger turnaround plan that aims to address the challenges posed by declining sales and increased competition, especially from brands like Dunkin'. The layoffs will primarily affect the company's support teams, following an earlier reduction of 1,100 jobs earlier this year, as the company seeks to redirect funds towards enhancing the store experience, as detailed in reports from India Times, CBS News, and NPR.

In an effort to mitigate the impact of these layoffs, Starbucks is offering severance packages and potential transfers to nearby locations for affected employees. The company aims to redesign its stores with comfortable seating and faster service to attract more customers, especially as it has faced a drop in sales during recent quarters. The restructuring plan is expected to cost Starbucks about $1 billion, with substantial expenses related to closing stores and severance payouts, as indicated by Bangkok Post and Al Jazeera.

Starbucks is also in the process of revamping its menu and improving customer service to counteract a prolonged phase of declining sales. The company has acknowledged that its current strategies were, until recently, ineffective, as seen in the struggles against smaller chains offering cheaper options and the impact of cost control measures initiated under Niccol's leadership, with the goal to revitalize the Starbucks brand overall, according to Los Angeles Times and AA.