Starbucks Confirms 250 Closures After Gaining 'Deeper Visibility Into Some Underperforming' Stores

Starbucks store closures will affect approximately 250 coffeehouses across North America after the company disclosed a new portfolio reset on 24 September. The move also cuts Starbucks' fiscal 2026 net-new global coffeehouse target to about 440, down from previous guidance of 600 to 650. The company expects approximately $300 million (£226.41 million) in restructuring charges connected with the plan.

The news came after Starbucks' board approved the restructuring actions on 22 September under its 'Back to Starbucks' strategy. Most of the affected coffeehouses are expected to close by the end of fiscal 2026.

Starbucks expects about $200 million (£150.94 million) of the restructuring charges to be cash costs, mainly linked to lease exits and employee separation benefits. A further $100 million (£75.47 million) is expected to be non-cash, reflecting asset disposals and impairments.

Chief Operating Officer Mike Grams said Starbucks had reviewed its North America portfolio and identified coffeehouses that were not meeting its financial or customer experience expectations. The company said affected employees would be offered transfers to other locations where possible. Severance support will be provided when alternative placement is unavailable.

Starbucks Store Closures Followed July Warning

The September announcement followed a warning during Starbucks' third-quarter earnings call on 29 July. That warning came from Chief Financial Officer Cathy Smith, not Chairman and Chief Executive Brian Niccol.

Smith said Starbucks was 'gaining deeper visibility into some underperforming coffeehouses,' adding that the review could result in closures.

During the same earnings call, Smith said Starbucks still expected 600 to 650 net new coffeehouses during fiscal 2026. Less than two months later, the company formally reduced that figure to approximately 440.

The revised target refers to net new global company-operated and licensed coffeehouses, rather than 440 new openings in North America alone. It is between 160 and 210 coffeehouses below the previous guidance range.

Starbucks said the approximately 250 North America closures would be partly offset by higher net new openings in international markets. The company also said it continues to see longer-term opportunities to expand its North American business.

Capital expenditure has meanwhile fallen sharply year on year, although the figures do not establish when Starbucks decided to close the affected stores.

Starbucks reported $887.8 million (£670.01 million) in additions to property, plant and equipment during the first 39 weeks of fiscal 2026. That compares with $1.85 billion (£1.4 billion) during the corresponding period a year earlier, a fall of about 52%.

Those figures cover Starbucks' broader property, plant and equipment spending. They should not be treated as a measure of coffeehouse investment alone or evidence that the closure plan had already been decided.

The restructuring has also drawn a response from Starbucks Workers United. The union said 20 unionised stores were among the locations affected and said it would seek further information from Starbucks.

Starbucks Margins Improved With Tariff Refund Benefit

Starbucks' official third-quarter results showed improved margins compared with the previous year, although tariff refunds contributed to that performance.

Consolidated GAAP operating margin increased by 60 basis points to 10.5% for the quarter ended 28 June. Non-GAAP operating margin rose by 430 basis points to 14.4%.

Starbucks said the GAAP margin improvement reflected sales leverage and lower inflation alongside tariff refunds. Those benefits were partly offset by restructuring expenses and labour investments linked to the 'Back to Starbucks' strategy.

North America operating margin reached 13.6%, compared with 13.3% a year earlier.

The company's regulatory filing said tariff refunds received during the quarter largely offset related tariffs incurred during the first three quarters of fiscal 2026. That means the refunds formed part of the reported margin improvement and should be separated from underlying operating changes.

The latest restructuring will add further costs to Starbucks' financial results. Around $100 million of the expected charges are non-cash, while approximately $200 million are expected to involve cash costs tied mainly to leases and employee separations.

Starbucks said in July that its fourth-quarter fiscal 2026 conference call was tentatively scheduled for 29 October. As of 27 September, the company had not posted a formal fourth-quarter call announcement on its investor relations news page.