Starbucks' Billion-Dollar Gamble: Closing Stores, Slashing Jobs, and Chasing Gen Z
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Starbucks' Billion-Dollar Gamble: Closing Stores, Slashing Jobs, and Chasing Gen Z
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Starbucks has seized headlines this week with dramatic announcements and sweeping changes echoing through its stores and offices. Fortune reports that the board greenlit a billion-dollar restructuring plan, and nearly every business publication is calling it the company’s boldest gamble in recent memory. The centerpiece is Starbucks’ decision to close at least 100 North American cafés immediately, pivoting away from the mobile-only pickup model that was supposed to lure Gen Z, and aiming to recapture its role as the beloved “third place”—the cozy venue between home and work that built the brand’s legacy. According to WGCU and NJBIZ, as many as 500 locations may disappear, though Starbucks isn’t confirming exact figures. A public Google sheet tracking digital storefront closures suggests at least five shops in New Jersey, four in Fresno, and nearly 150 in California are already offline. If you tried to order at these locations this weekend, you’d find them listed as “closed” in the app, their doors locked and their communities already posting sad farewells on Reddit.
The company’s payroll is also getting leaner, with about 900 non-retail partner roles and many open positions slashed—affected workers were notified on Friday, and both Morningstar and The Business Journal detail that $150 million of the restructuring budget targets severance and extended benefits to help cushion the blow. Starbucks asked remote employees to work from home during the transition, adding a somber note for a company often associated with bustling in-person offices.
At the helm is Brian Niccol, Starbucks’ new CEO and turnaround specialist whose last gig at Chipotle saw him double that brand’s revenue. He’s driving what’s branded as the “Back to Starbucks” strategy, aiming to reverse six straight quarters of same-store sales declines and a notable slide in market share among Gen Z, which has dropped from 67% to 61% in two years. Niccol told staff and posted on Starbucks’ blog that closing any location is “difficult,” but the chain needs a leaner corporate structure to survive. He also insists Starbucks hasn’t lost its grip on young customers, as value perceptions remain high—though Consumer Edge’s numbers cast some doubt.
Social engagement surged this weekend, with Starbucks Workers United—the union representing 12,000 baristas—publicly demanding input on the closures and promising to fight for job transfers. Their statement, echoed across Business Insider and Twitter, calls for the company to “center the people who engage with customers day in and day out.” Meanwhile, a new lawsuit over Starbucks’ updated dress code by unionized employees in three states adds another twist to the employee drama.
Store closures dominate the news cycle, but Niccol promises this is only a reset. Next year, expect a rebound: more than a thousand existing stores will be remodeled for “texture, warmth, and layered design,” according to multiple sources. Worldwide, Starbucks will end the fiscal year with about 32,000 outlets. Wall Street shrugged at the shakeup, with shares nudging less than one percent on Thursday. The timing and scope have set the gossip mill spinning about Niccol’s next move and whether this reset can restore Starbucks’ legendary traction with the culture-shaping generations it was built upon.
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