Starbucks Is Closing Stores and Cutting Jobs. Will It Save the Stock?

Key Points

• As the latest step in its turnaround effort, Starbucks announced a net closing of about 200 stores this year.

• The company is also cutting 900 non-retail jobs.

• CEO Brian Niccol remains optimistic about the company's turnaround.

• These 10 stocks could mint the next wave of millionaires ›

It's been one year since Brian Niccol took the top job at Starbucks (NASDAQ: SBUX). The move surprised industry observers. Niccol had earned a reputation as a turnaround specialist after getting Chipotle rolling again when the burrito chain was still reeling from the fallout of an E. coli-related crisis that started back in late 2015.

Starbucks stock jumped roughly 25% in a single session on news of the burrito whisperer's arrival, but since then, the java giant has disappointed investors as Starbucks and Niccol struggle to return the business to steady growth. As you can see from the chart below, Starbucks has served investors a half-empty cup over the last year.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Data by YCharts.

Niccol has done a good job of communicating his strategy, called Back to Starbucks, to investors, and it's received plenty of press coverage. He's tried to bring a human touch back to customer service, encouraging baristas to write messages to customers, making stores more inviting with improved designs and store cleanliness, and even serving coffee in ceramic mugs. He's also focused on solving the bottleneck from the influx of online orders Starbucks gets in the mornings, giving priority to in-store customers.

Those efforts have yielded mixed results thus far, and on Thursday, the company announced the latest update to its turnaround plan. It's closing some stores and laying off some corporate staff.

Image source: Starbucks.

What is Starbucks doing?

In line with the Back to Starbucks plan, Niccol said the company had reviewed its portfolio of coffeehouses and will be closing those that don't "create the physical environment our customers and partners expect, or where we don't see a path to financial performance." He didn't say how many stores the company would close, but the net effect with store openings is a loss of about 200 stores this year, leaving Starbucks with close to 18,300 locations at the end of the fiscal year in North America.

Along with the store closure plan, Starbucks also plans to refurbish over 1,000 locations to "introduce greater texture, warmth, and layered design." Additionally, the company will eliminate 900 non-retail jobs and close many of its open positions.

Niccol expressed optimism for the store refreshes, saying early results from other "coffeehouse uplifts" have been positive, and adding labor during busy hours is also paying off.

A move Howard Schultz would appreciate

The store-closing and refresh plan is not unlike what Founder Howard Schultz did in 2008 when he returned to the CEO chair. Schultz closed 600 stores, arguing that the chain had overexpanded and some of its locations were stale, not offering the welcoming "third place" the brand was known for.

That move paid off and helped set the stage for Starbucks' next round of growth, resetting the brand and getting its focus back to the things that have differentiated it like customer service, being a comfortable third place, and treating customers to an affordable luxury.

It's unclear if this round of store closures will work the same magic. Starbucks is much bigger and more mature now. It faces a wide range of competition, including from the fast-growing Dutch Bros chain.

Can Starbucks turn it around?

What is clear after a year with Niccol at the helm is that any turnaround is going to take time as same-store sales are still declining. Additionally, the company is facing headwinds from weak discretionary spending in the U.S. and a slowing job market.

Niccol seems to be making the right moves, but investors will have to be patient, especially if the economy doesn't cooperate. The stock also still seems to be pricing in a turnaround -- its price-to-earnings ratio is now over 30, which is expensive for a restaurant chain that has been struggling for at least a few years.

In Starbucks' recent earnings report, Niccol expressed optimism for 2026, saying, "We'll unleash a wave of innovation that fuels growth, elevates customer service, and ensures everyone experiences the very best of Starbucks."

At this point, a quick improvement is unlikely. Starbucks investors will have to be patient as Niccol's strategy plays out.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $460,853!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $48,820!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $651,593!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.

See the 3 stocks »

*Stock Advisor returns as of September 22, 2025

Jeremy Bowman has positions in Chipotle Mexican Grill and Starbucks. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Starbucks. The Motley Fool recommends Dutch Bros and recommends the following options: short September 2025 $60 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.