Starbucks in Trouble? $1 Billion Gamble, Store Closures, and Mass Layoffs Raise Questions - What's Going On?

Starbucks is closing hundreds of cafés in the US and UK, laying off nearly 2,000 employees, and spending £820 million (approximately $1 billion) in a major overhaul aimed at rescuing its declining business Many are asking: 'Is Starbucks in trouble?'

The coffee giant is planning on shutting down about 1% of its North American stores by the end of September 2025. That's a reduction from 18,734 to 18,300 locations with roughly 430 cafés closing their doors. CEO Brian Niccol said these are sites where there is no clear path to financial performance or where the physical setup no longer meets customer expectations.

The closures come as part of what Niccol calls a 'significant action' to address deeper problems. He said this round of cuts goes beyond Starbucks' usual approach of closing underperforming outlets. These decisions, he said, were not taken lightly, as each store closure affects local communities, customers, and employees.

The company expects the restructuring to cost £820 million (approximately $1 billion). Niccol has promised a return to growth once these changes take effect.

Second Round of Layoffs Hits Headquarters

Alongside store closures, Starbucks is also laying off an additional 900 corporate employees. This is the second wave of cuts in 2025, following the loss of 1,000 roles earlier this year in February. All affected employees were notified on Friday and offered severance packages and support.

The company also confirmed that many currently open roles will be eliminated. These changes are focused on simplifying operations and cutting costs at a time when Starbucks is struggling to turn a profit. Niccol said the move was needed to build a 'more resilient' Starbucks and to create better opportunities in the long run.

The announcement followed a full review of the company's business footprint. Starbucks said stores selected for closure were assessed based on both customer experience and financial viability.

New Store Designs and Menu Changes

Despite the cuts, Starbucks has confirmed it still plans to remodel over 1,000 locations in the coming months. New designs will include warmer colours, cozier chairs, and more power outlets. These changes aim to update the brand's physical presence and encourage customers to stay longer.

In a broader shift, the company is also tweaking its menu and store layout. Around 30% of menu items have been removed, while trendy new items such as protein toppings, coconut water, and revamped croissants are being introduced. Starbucks is also making smaller reintegrations, including the return of self-serve milk and sugar stations and adding doodles to takeaway cups.

The company recently rebranded itself as 'Starbucks Coffee Company' to highlight its focus on core offerings. However, some changes have not gone smoothly. New drink recipes have been criticised by baristas as being overly complex to prepare, especially during peak hours.

One Year Under New Leadership

Brian Niccol has now been CEO of Starbucks for a year. His arrival was seen as a turning point for the company, but financial results have so far fallen short of expectations. The company's stock is down roughly 12% since he took over.

Employee relations have also become strained. Changes to uniforms sparked a lawsuit earlier in the year, and some baristas have publicly voiced frustration over new procedures. Despite promises of support, staff morale appears to be under pressure.

Starbucks says it remains committed to its partners, customers, and communities, but the scale of recent changes has raised questions. With widespread closures, sweeping job losses, and £820 million on the line, the company's future direction looks uncertain. The coming months will be critical in determining whether this bold plan will turn things around.