Starbucks is set to close approximately 400 stores across the United States, primarily targeting major metropolitan areas. This decision is part of a significant $1 billion restructuring initiative aimed at adapting to evolving consumer behaviors and intensifying market competition.

The closures will largely affect urban centers such as New York, Los Angeles, Chicago, San Francisco, and Baltimore, where Starbucks has encountered challenges in sustaining profitability and upholding brand standards. Several factors have contributed to this strategic shift, including the rise of remote work, increased competition from both niche coffee shops and larger chains, and inflationary pressures. The company has already closed 42 stores in New York City. In addition, more than 20 stores have closed in Los Angeles, 15 in Chicago, six in Minneapolis and five in Baltimore.

Starbucks' decision to close stores reflects a broader review of its over 18,000 locations in North America, with a focus on underperforming stores or those unable to meet brand standards. CEO Brian Niccol, who was brought in from Chipotle last year, is spearheading the "Back to Starbucks" strategy, which seeks to reposition the brand as a "third place" between home and work. The strategy emphasizes enhancing customer experience and improving operational efficiency.

In addition to the closures, Starbucks plans to renovate over 1,000 stores to align with its updated vision and shift its focus to suburban areas where operating costs are lower. The company also intends to launch a new store design next year to modernize its look and better cater to customer needs.

The restructuring also includes laying off approximately 900 corporate employees. Starbucks will attempt to reassign affected workers to nearby locations, and those who cannot be reassigned will receive severance packages.

This move comes after six consecutive quarters of declining same-store sales in the U.S., signaling the need for a strategic overhaul. Despite these challenges, Starbucks remains committed to its transformation plan, which includes modernizing store designs and improving customer engagement.

Some experts say that Starbucks is a "victim of its own success". While it once revolutionized the coffee industry, the company now faces stiff competition from various sources, including smaller chains, niche coffee shops, and beverage shops specializing in smoothies and bubble tea.

The closures have prompted concerns from Starbucks Workers United, a union representing some of the company's employees, regarding the lack of input from baristas in the decision-making process. The union plans to advocate for placement options for affected workers.

Despite the closures, Starbucks is also planning to open and remodel stores in major metro cities such as New York and Los Angeles in 2026.