Starbucks Corp. Chief Executive Officer Brian Niccol has spent a lot of his first year making cosmetic changes — including bringing back ceramic mugs — in a bid to revive the world’s largest coffee chain.

But now Niccol is onto the meatier part of right-sizing the company. On Thursday, Starbucks said it will close 1% of its stores in the US and Canada while cutting 900 jobs.

Investors largely shrugged at the announcement. Wall Street might have wanted deeper cuts for a company with 360,000 employees as of last year and 41,000 locations globally.

The turnaround “still has a long way to go,” Melius Research analyst Jacob Aiken-Phillips said. The changes being made still don’t “address that their prices have just gotten way too high” for the current competitive and economic environment.

Starbucks shares declined about 1% 10:55 a.m. in New York. The stock was down 8% this year as of Wednesday’s close, compared with a 13% increase in the S&P 500 Index.

One reason for the muted reaction could be that the company said during its last earnings call that cuts may be coming, according to Bloomberg Intelligence analyst Michael Halen.

Niccol is attempting to lead a turnaround at the coffee chain after six straight quarters of same-store sales contractions. The plan centers on reviving locations by adding seating and electrical outlets to encourage more visits for longer durations.

Those changes have yet to make a meaningful dent in the Seattle company’s financial performance and this marks the second round of job cuts under Niccol.

Thursday’s announcement came after the company identified stores where it couldn’t see a path toward profitability and decided to close them. It plans to focus on stores that align with Niccol’s plan to make its restaurants a more inviting place to visit.

“Early results from coffeehouse uplifts show customers visiting more often, staying longer and sharing positive feedback,” Niccol said in a letter to employees on Thursday.

After the closures, Starbucks said it plans to grow the number of stores it operates and refurbish another 1,000 restaurants.

Pickup-only stores

A portion of the closures may affect some of the small pickup stores that only took mobile orders, the company confirmed to Bloomberg News. Other stores in that format will be converted to full-service cafes. These locations were part of previous management’s growth strategy.

“That format is done,” Aiken-Phillips said of the mobile pickup-only stores. “They’re trying to build that whole third place where you can go sit down in the coffee shop.”

Most recently, Starbucks reported sales and profit that missed expectations for the fiscal third quarter. The company is also facing increased competition from smaller chains in the US and China, its two largest markets, that are cranking out cheaper beverages to customers at a faster rate.

Starbucks is paring down its menu to reduce drink complexity — a bid to lessen wait times — and to make room for new items that better match changing consumer tastes. The cafe operator has increased its sugar-free options and introduced protein-infused beverages as customers seek healthier options.

Analysts and investors, while generally in favor of the changes, have grown wary of the cost and timeline of Niccol’s plan. Profitability worsened last quarter due to the investments aimed at revitalizing the brand.

©2025 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency, LLC.