Shrinking how you ask?
It’s actually in three ways.
The latter two are because of the first.
Starbucks has been struggling for a while now. It’s why a year ago they brought in the successful CEO from Chipotle, Brian Niccol.
But turnarounds take time, so the streak of six straight quarters of lower same-store sales has continued. In other words, as a whole, the Starbucks stores that have been open more than a year are getting less business than they did a year ago. And that’s happened for six quarters in a row.
Which brings us to today’s news…
In an open letter to employees (aka “Partners”), Niccol announced that there will be new layoffs of about 900 current jobs that are not at the actual stores. Plus, closing many open positions they’d been looking to fill.
In addition, Niccol is estimating that it will leave this fiscal year with about 1% fewer North American locations than it entered the year.
All this shrinking is part of Niccol’s efforts to get Starbacks back to that warm third place we remember before we started picking up efficient mobile orders from human robots struggling to keep up with increasingly complex orders.
Niccol has shown his skill at both Taco Bell and Chipotle, so he deserves some time as he puts tons of changes into place (e.g. have you noticed those little notes on your coffee and the friendlier baristas?).
Starbucks isn’t just shrinking, either. Over the next 12 months, Starbucks is looking to refurbish more than 1,000 locations to make them warmer (e.g. bringing back more chairs). And Niccol expects store count to grow in fiscal 2026.
So Starbucks is shrinking in the short term, but is hoping to get back to growth on the back of better customer experiences in the future.
We’re excited to see how it goes as we grab our coffees (at least when we’re not making our own dupes). More to come!
Links on this page may be affiliate links, for which the site earns a small commission, but the price for you is the same
Leave a Comment