Starbucks will close 250 underperforming North American stores this week, the coffee giant told employees Thursday. It is the second sweeping round of cuts since installing new leadership in 2024 and lands atop the 627 stores the chain shut roughly a year ago.
The closures are part of a $1 billion restructuring effort called "Back to Starbucks," which also included 300 corporate layoffs in May.
At a glance
- 250 North American Starbucks stores will close this week, the company told employees on Thursday.
- Starbucks operates roughly 18,300 locations across North America; the company did not say which markets are losing stores.
- Closures target cafes that are "underperforming financially or unable to deliver" the brand's desired experience, per COO Mike Grams.
- The cuts follow 627 closures roughly a year ago and 300 U.S. Corporate layoffs in May, part of the company's $1 billion "Back to Starbucks" plan.
- Retail analysts cite small urban footprints and weaker post-pandemic foot traffic as drivers of urban losses.
How we got here
Starbucks spent the late 2010s opening hundreds of stores per year and building dense urban networks. Then the pandemic hollowed out office towers and commuter foot traffic in city centers while suburban drive-throughs kept humming.
In late 2021, baristas began organizing through Starbucks Workers United, and the union has since spread to roughly 700 U.S. Stores without a labor agreement. Sales softened, and the company leaned on discounting and mobile ordering to keep volume up. By 2024, a new executive team arrived and framed the response as a return to basics: better espresso, warmer cafes, fewer dead-end locations.
The first pruning came roughly a year ago, with 627 store cuts in North America and Europe and about 900 non-retail roles gone. A second round followed in May with corporate layoffs and the wind-down of underused regional offices. Starbucks also led New York City's chain-store closure count during that period, shutting 42 city locations. Brokers told Commercial Observer those urban spots were hardest hit because their small footprints are tough to retrofit and their traffic has not bounced back.
What changed now
This week's 250 closures sit inside a wider physical refresh. Grams told employees that 1,500 store retrofits are due by September 30, and Starbucks has said it still intends to add to its North American footprint overall. In other words, the chain is rotating stock, not retreating. Cafes that cannot deliver the new format or the new economics are being cleared out so capital and labor can flow to ones that can.
The internal line is that the retrofit program has given management a sharper read on which cafes are pulling their weight. Grams wrote that the laggards keep falling behind even as the rest of the fleet gains ground.
Who is affected
The immediate impact lands on three groups. Store-level baristas and shift managers at the 250 closing locations face transfers, severance, or job loss depending on tenure and local rules. Landlords lose a tenant, and in dense retail corridors, a Starbucks vacancy is a signal other brokers read. Competitors, from Dutch Bros and 7 Brew to independent cafes, get room to pick up spillover morning traffic in the affected submarkets.
For commercial real estate, the urban closures are the more interesting story. Brokers who most often represent Starbucks in New York did not comment when contacted by Commercial Observer. Landlords with small-format urban Starbucks leases are now weighing whether to reposition for another quick-service coffee brand, a fast-casual restaurant, or a non-food tenant entirely.
Our analysis
Look at the pattern, not the headline number. Starbucks is trimming roughly 1.4 percent of its North American base in one week, on top of the 627 it cut last year. That is portfolio management, not a brand in retreat. The winners are landlords holding drive-through-capable pads and the operators chasing Starbucks refugees. The losers are urban retail property owners whose rents were underwritten on pre-pandemic foot-traffic assumptions and whose backup tenant list is thin.
One trade-off worth flagging: the union question is not going away. Starbucks Workers United has spread to about 700 stores, and a leaner footprint makes future organizing and bargaining more concentrated. A closure list that skews toward or away from unionized stores will signal whether "Back to Starbucks" is also quietly a labor strategy.
What it means for you
Say you are a retail landlord with a small-format urban Starbucks lease coming up for renewal or already on a watch list. Start the conversation now, not at lease expiry. The brokers who move fastest in a Starbucks rotation are the ones with a short list of coffee and fast-casual backup tenants already approved by the property's ownership. If your Starbucks is at risk, expect the company to be quiet about it until deals are signed elsewhere, so do not wait for a formal heads-up before lining up alternatives.
Say you are a tenant rep chasing growth. Submarkets losing a Starbucks are about to get a quick-service coffee vacancy, often in a corner unit with good frontage. That is a rare opening, and the landlords most exposed will negotiate.
Say you are an investor watching consumer discretionary names. A retailer willing to close 1,000-plus stores across two years while still planning net growth is doing capital allocation, not panic surgery.
Bottom line
Starbucks is pruning, not retreating, and the real estate signal is in the submarkets, not the headline. Watch urban small-format vacancies for the next 90 days. Watch how many of the 1,500 promised retrofits actually reopen on time. And watch whether the closure list drifts toward unionized stores or away from them, because that will tell you whether "Back to Starbucks" is also quietly a labor strategy.
Key takeaways
- 250 closures is rotation, not retreat; Starbucks still plans net North American store growth alongside 1,500 retrofits due by September 30.
- Urban small-format cafes are the exposed asset class, with small NYC footprints already blamed for 42 city closures.
- Landlords with Starbucks leases should line up backup tenants now; tenant reps should target submarkets losing a coffee anchor for quick deals.
Frequently asked questions
How many Starbucks stores are closing this week?
About 250 North American locations, according to a Thursday letter from COO Mike Grams reported by the Associated Press.
Which cities or states are losing stores?
Starbucks has not published a list. Retail analysts told Commercial Observer that urban markets such as New York City have been the most exposed so far.
Is this related to the Starbucks union?
The closures are officially tied to financial underperformance and store experience, but Starbucks Workers United has spread to roughly 700 U.S. Stores during the same period without a labor agreement.
Will Starbucks open new stores to replace the closed ones?
Yes. Grams said the company remains committed to expanding its North American footprint, with about 1,500 store retrofits due by September 30.
What should a retail landlord do if their Starbucks is at risk?
Treat any lease event, even a quiet one, as a trigger to approach backup coffee and fast-casual tenants early, since Starbucks is unlikely to flag a closure before it has lined up its next move.