Brian Niccol, CEO of the coffee shop giant, said the company will shutter underperforming locations and those where remodels are unworkable. The company plans to uplift another 1,000 shops.

Starbucks plans to close more than 100 locations across North America and lay off another 900 non-retail employees, CEO Brian Niccol said in a system message on Thursday.

The exact number of closures is not certain. Niccol said that the company will end its current fiscal year with 18,300 locations in North America, which will be a decline of 124 over the past year. The company’s fiscal year ends at the end of this month.

Niccol also said Starbucks will close about 1% of its company-operated shops in North America, which totaled 11,161, which is about 111 shops. But Starbucks has opened locations over the past 12 months.

The closures follow a review of the company’s North America coffee shop portfolio as part of Niccol’s “Back to Starbucks” plan. He said that the company identified shops where it is unable to “create the physical environment our customers and partners expect, or where we don’t see a path to financial performance.”

“Each year, we open and close coffeehouses for a variety of reasons, from financial performance to lease expirations,” Niccol said. “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.”

Employees at those shops will be offered opportunities to transfer to other locations. Those who cannot will be offered severance packages.

Starbucks is also laying off “non-retail headcount,” cutting 900 employees, which Starbucks calls “partners.” It will also close a number of open positions.

Those partners whose roles are being eliminated will be notified on Friday and will be offered severance and other support, including benefit extensions. Niccol suggested that the layoffs are designed to offset the company’s investments in retail partner hours.

“As we build toward a better Starbucks, we’re investing in green apron partner hours, more partners in stores, exceptional customer service, elevated coffeehouse designs and innovation to create the future,” Niccol wrote. “We will continue to carefully manage costs and stay focused on the key areas that drive long-term growth.”

Niccol did suggest that the company’s investments in remodels and in-store employees appear to be working.

He said that “early results” from its store uplifts show customers “visiting more often, staying longer and sharing positive feedback.” Starbucks plans to uplift another 1,000 shops, which are designed to improve the in-store experience and encourage customers to stay longer.

Niccol also suggested that in locations where the company added more in-store partner hours there have been improvements in transactions, sales and service times.

The closures nevertheless put at least a temporary halt to Starbucks’ store expansion of recent vintage and represent the chain’s largest pullback in more than 15 years. The chain shuttered hundreds of locations during the Great Recession, Starbucks’ last major sales challenge.

Since then, Starbucks has opened 3,500 company-operated shops while licensees have added another 2,400 locations, according to data from Restaurant Business sister company Technomic. Over the past five years Starbucks has added nearly 2,000 U.S. shops alone.

Source https://www.restaurantbusinessonline.com/financing/starbucks-will-close-more-100-locations-lay-another-900-workers

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