American multinational coffee chain Starbucks has announced plans to close approximately 250 underperforming coffeehouses across North America by the end of the week.
Starbucks’ chief executive officer Mike Grams confirmed the decision in a statement, stating that the company could not see a viable financial performance in the affected locations.
“We have carefully reviewed our North America coffeehouse portfolio and identified locations where we do not believe we can consistently deliver the experience we want for customers and partners or where we don’t see a path to acceptable financial performance.
“As a result, we will close approximately 250 coffeehouses later this week. This represents approximately 1% of our more than 18,000 North America coffeehouses,” the company said.
Despite the decision to close down the identified locations, Mr Grams said that Starbucks’ business remains strong in North America, noting that the company was close to completing the uplifting of 1,500 coffeehouses.
“As we shared on our most recent earnings calls, our North America business has returned to strong growth. Customers are receiving faster service, a more consistent experience, and warmer, more welcoming coffeehouses.
“We’re accelerating our pace toward completing 1,500 coffeehouse uplifts, and Green Apron Service has become our defining standard. Our Back to Starbucks strategy is working,” Mr Grams stated.
Starbucks said it still expects to open more stores globally than close for the fiscal year, and estimated about 440 net store openings for the year-down from its previous goal of 600 to 650 store openings after factoring in the closures.
Additionally, the company noted it anticipates to incur a $300 million charge, including $200 million for lease exits and employee separation benefits, and $100 million for disposing of store assets.
