Starbucks announces $1 bn restructuring plan, closing stores, laying off 900 employees
According to a statement filed with the Securities and Exchange Commission (SEC), Starbucks will shutter locations that do not meet the company’s standards for physical environment or financial performance. The majority of these closures are expected to be completed by the end of the current fiscal year.
- Sep 25, 2025,
- Updated Sep 25, 2025 5:20 PM IST
Starbucks on Thursday unveiled its $1 billion restructuring plan that will see the closure of underperforming stores and the layoff of 900 employees. The move, approved by the company’s board, is part of its broader “Back to Starbucks” initiative, aimed at revitalizing its store portfolio and enhancing the overall customer experience.
As per a news report by Reuters, the company has approved a restructuring plan to close underperforming coffee houses in North America and cut some jobs as the company looks to revive sales and profits.
"During the review, we identified coffeehouses where we’re unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance, and these locations will be closed," Niccol said in a letter to employees.
According to a statement filed with the Securities and Exchange Commission (SEC), Starbucks will shutter locations that do not meet the company’s standards for physical environment or financial performance. The majority of these closures are expected to be completed by the end of the current fiscal year. Analysts note that with a current ratio of 0.76—indicating short-term liabilities exceed liquid assets—the timing of this restructuring is prudent.
The company expects to incur roughly $1 billion in costs related to store closures, support organization restructuring, and other associated activities. Approximately 90% of these expenses will come from its North American operations, with a significant portion recognized in fiscal year 2025. Starbucks currently carries total debt of $27.9 billion, considered moderate relative to its operations.
A breakdown of the anticipated charges includes about $150 million for employee separation benefits, $400 million for disposal and impairment of company-operated store assets, and $450 million largely tied to accelerated amortization of right-of-use lease assets and other lease-related costs from early closures. Around $400 million of these charges will be non-cash, with the remaining $600 million representing future cash outflows for employee benefits and lease exits.
Separately, Starbucks is seeking bids for a controlling stake in its China business, with global investment firms such as Carlyle Group and EQT, as well as regional players like HongShan Capital Group and Boyu Capital, preparing final offers. Valuations are reportedly up to $5 billion, with most bids reflecting roughly ten times projected 2025 EBITDA. Starbucks has requested non-binding offers from a shortlist that includes Bain, KKR, Hillhouse Investment, Primavera Capital, and Tencent within a two-week window.
In addition, Starbucks announced a 2% salary increase for all North American salaried employees, including corporate staff, manufacturing and distribution workers, and store managers. Reflecting confidence in the company’s turnaround strategy, Baird upgraded Starbucks’ stock rating from Neutral to Outperform and raised its price target to $115.00.
Starbucks on Thursday unveiled its $1 billion restructuring plan that will see the closure of underperforming stores and the layoff of 900 employees. The move, approved by the company’s board, is part of its broader “Back to Starbucks” initiative, aimed at revitalizing its store portfolio and enhancing the overall customer experience.
As per a news report by Reuters, the company has approved a restructuring plan to close underperforming coffee houses in North America and cut some jobs as the company looks to revive sales and profits.
"During the review, we identified coffeehouses where we’re unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance, and these locations will be closed," Niccol said in a letter to employees.
According to a statement filed with the Securities and Exchange Commission (SEC), Starbucks will shutter locations that do not meet the company’s standards for physical environment or financial performance. The majority of these closures are expected to be completed by the end of the current fiscal year. Analysts note that with a current ratio of 0.76—indicating short-term liabilities exceed liquid assets—the timing of this restructuring is prudent.
The company expects to incur roughly $1 billion in costs related to store closures, support organization restructuring, and other associated activities. Approximately 90% of these expenses will come from its North American operations, with a significant portion recognized in fiscal year 2025. Starbucks currently carries total debt of $27.9 billion, considered moderate relative to its operations.
A breakdown of the anticipated charges includes about $150 million for employee separation benefits, $400 million for disposal and impairment of company-operated store assets, and $450 million largely tied to accelerated amortization of right-of-use lease assets and other lease-related costs from early closures. Around $400 million of these charges will be non-cash, with the remaining $600 million representing future cash outflows for employee benefits and lease exits.
Separately, Starbucks is seeking bids for a controlling stake in its China business, with global investment firms such as Carlyle Group and EQT, as well as regional players like HongShan Capital Group and Boyu Capital, preparing final offers. Valuations are reportedly up to $5 billion, with most bids reflecting roughly ten times projected 2025 EBITDA. Starbucks has requested non-binding offers from a shortlist that includes Bain, KKR, Hillhouse Investment, Primavera Capital, and Tencent within a two-week window.
In addition, Starbucks announced a 2% salary increase for all North American salaried employees, including corporate staff, manufacturing and distribution workers, and store managers. Reflecting confidence in the company’s turnaround strategy, Baird upgraded Starbucks’ stock rating from Neutral to Outperform and raised its price target to $115.00.