Starbucks announced Thursday a new restructuring plan that will shutter hundreds of stores and cut hundreds of jobs. The plan comes as CEO Brian Niccol aims to revive sales and profits.
According to CNN, the coffee chain will close more than 400 underperforming U.S. stores this month, reducing its North American locations from 18,734 to 18,300.
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Partners in the coffeehouses scheduled to close will be notified this week, Niccol said.
“We’re working hard to offer transfers to nearby locations where possible and will move quickly to help partners understand what opportunities might be available to them,” Niccol said in a statement.
The targeted stores underwent review prior to the decision to close and were ones “unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance.”
The $1 billion restructuring plan also includes 900 corporate layoffs, in addition to the approximately 1,000 announced last February.
“This is a more significant action that we understand will impact partners and customers,” Niccol said. “To those partners who will be leaving, I want to say a profound thank you. To those continuing on our turnaround journey, I deeply appreciate your commitment to helping us get back to Starbucks.”
Starbucks’ turnaround push
The company has spent the past year overhauling its U.S. operations to bring the classic coffeehouse feel – introducing ceramic mugs, upgraded seating and faster service.
According to Reuters, the company is also trying to sell a stake in its China business, citing increased competition and weak demand.
So far this year, Starbucks shares have fallen 7.7%. Still, Niccol said efforts so far have resulted in customers visiting more often, staying longer and sharing positive feedback.
“We saw improvements in transactions, sales, and service times, alongside happier, more engaged partners,” Niccol added.
