Starbucks is set to close approximately 400 stores across the United States as part of a strategic shift in response to increased competition and changing consumer behaviors.
Starbucks, once synonymous with relentless expansion, is now reevaluating its approach to store locations. The coffee giant, which previously focused on saturating urban areas to attract morning commuters, is facing challenges due to rising competition and the growing trend of remote work.
Under the leadership of CEO Brian Niccol, who joined the company from Chipotle last year, Starbucks is shifting its strategy. Niccol aims to reduce the proximity of stores to one another, leading to the decision to close roughly 400 locations nationwide, primarily in large metropolitan areas. This move is part of a broader $1 billion restructuring plan.
In New York City alone, Starbucks has closed 42 locations, representing 12% of its total stores in the city. This closure comes as the company recently lost its title as the largest coffee chain in Manhattan to Dunkin’ Donuts, according to the Center for an Urban Future, a think tank that monitors chain openings and closings in the city.
Other major cities have also felt the impact of Starbucks’ closures. The company has shut down more than 20 locations in Los Angeles, 15 in Chicago, six in Minneapolis, and five in Baltimore, among others.
A Starbucks spokesperson stated that the company conducted a thorough review of its more than 18,000 stores in the United States and Canada, closing those that were underperforming or unable to meet brand standards. Despite the closures, Starbucks plans to open new stores and remodel existing ones in 2026, particularly in major metro areas like New York and Los Angeles.
According to CNN, Starbucks is described as a “victim of its own success.” The brand revolutionized coffee culture, making it commonplace for consumers to pay premium prices for specialty drinks. However, it now faces stiff competition from niche coffee shops, smaller chains like Gregory’s and Joe’s Coffee, and a surge of beverage shops offering smoothies and bubble tea.
Arthur Rubinfeld, who played a key role in Starbucks’ real estate and design strategies during the 1990s and again from 2008 to 2016, noted that urban areas have seen a significant rise in competitive coffee shop openings, which have impacted Starbucks’ sales volume. Rubinfeld now runs Airvision, a consultancy focused on consumer brands.
The rise of remote work has also posed challenges for Starbucks, particularly in central business districts that once thrived on the daily influx of office workers. Catherine Yeh, director of market analytics at CoStar Group, mentioned that Starbucks has closed locations situated on the ground floors of several downtown office buildings in Los Angeles due to this shift.
Additionally, Starbucks has expressed concerns about becoming a de facto public restroom for many cities. Former CEO Howard Schultz highlighted the severity of the mental health crisis in the country, noting safety issues related to individuals using Starbucks locations as restrooms. In response, the company has recently revised its policy, limiting restroom access to paying customers only.
Starbucks has also faced labor challenges, including a significant strike by its workers demanding better hours and increased staffing. Earlier this month, the company agreed to pay over 15,000 workers in New York City to settle claims regarding unstable schedules and arbitrary hour reductions.
As Starbucks navigates these changes, the company is focused on adapting to a rapidly evolving market while maintaining its brand identity and commitment to quality.
According to CNN, the company’s strategic adjustments reflect a broader trend in the coffee industry as it responds to shifting consumer preferences and competitive pressures.