Starbucks to close 400 underperforming stores in US and Canada under $1 billion restructuring plan

Starbucks has confirmed plans to close approximately 400 underperforming stores across the United States and Canada as part of a sweeping $1 billion restructuring initiative announced in late December 2025. The strategy is being led by CEO Brian Niccol and marks a major shift in how the global coffee chain approaches store density, urban presence, and long-term growth.

The closures will largely impact high-density urban centers such as New York City and Los Angeles, where Starbucks is moving away from its long-standing “saturation” model. Instead of prioritizing sheer store volume, the company is now focusing on fewer, higher-performing locations that better reflect changing consumer behavior and economic realities.

One of the key drivers behind the decision is the permanent shift toward remote and hybrid work. With fewer workers commuting daily to central business districts, weekday foot traffic in downtown office areas has dropped significantly, making many city-center locations financially unsustainable.

Starbucks is also facing mounting competition in already saturated urban markets. Boutique coffee brands such as Blank Street and Blue Bottle have gained traction with design-forward stores and premium positioning, while drive-thru-focused chains like Dutch Bros continue to attract customers seeking speed and convenience. This competitive pressure has reduced Starbucks’ dominance in several major cities.

Operational challenges have further influenced the restructuring plan. Rising labor and operating costs, along with safety and maintenance concerns, have led the company to discontinue its open-access restroom policy. Starbucks is now prioritizing stores where it can better manage the physical environment, customer experience, and staff safety.

The store closures are part of a broader turnaround strategy internally referred to as “Back to Starbucks,” aimed at re-establishing the brand as a welcoming “third place” between home and work while adapting to modern consumption patterns.

As part of this pivot, Starbucks is redirecting investment toward suburban markets, particularly drive-thru outlets. These locations offer lower operating costs and align with growing consumer demand for accessibility and convenience, especially in car-dependent communities.

In parallel, the company plans to renovate approximately 1,000 existing U.S. stores over the next year, representing about 10% of its company-owned locations. The renovations will focus on improved seating, enhanced ambiance, and increased access to power outlets to better serve customers who prefer to sit, work, or socialize in-store.

The impact is already visible in New York City, where 42 Starbucks locations, around 12% of the brand’s presence in the city, have closed. As a result, Starbucks has lost its position as Manhattan’s largest coffee chain, with Dunkin’ taking the top spot.

Starbucks has stated that affected employees will be supported through transfers to nearby locations where possible or offered comprehensive severance packages. The company emphasized that workforce care remains a priority during the transition.

Customers seeking the latest information on specific store closures or operating hours are advised to use the Starbucks Store Locator or the official Starbucks mobile app.