The coffee giant Starbucks has decided to close approximately 400 of its stores, abandoning its strategy of having a dense presence in major cities in the United States. The company’s CEO, Brian Niccol, stated that they no longer want their stores to be located too close to each other. No statement has yet been made regarding the impact of this decision on the European and Turkish markets.
Starbucks has rapidly grown with the goal of becoming a brand seen “everywhere” in New York, Los Angeles, and other major cities in the U.S. for years. However, due to increasing competition, the rise of remote work, and escalating costs, the company has abandoned its strategy focused on city centers and closed approximately 400 stores nationwide.
Starbucks’ period of unlimited expansion had also been a subject of humor. In 1998, the satirical site The Onion mocked this growth with the headline “New Starbucks Opens in Existing Starbucks’ Bathroom”; comedian Lewis Black joked about seeing two Starbucks across from each other in Houston as if he had reached “the end of the universe.”
However, today the company acknowledges that its concentration strategy, which relied on customers consuming coffee in city centers, especially during morning commutes, is no longer working.
Brian Niccol, who was appointed as CEO last year to revitalize Starbucks from Chipotle, no longer wants stores to be located too close to each other. In line with this approach, the company has decided to close its branches concentrated in major metropolitan areas as part of a $1 billion restructuring plan.
According to CNN, the company plans to close a total of 400 stores in this context. It was noted that 42 stores, which correspond to 12% of Starbucks’ total locations in New York, will be closed. According to the Center for an Urban Future, which tracks the openings and closings of chain restaurants based in New York, Starbucks recently lost its title as the largest chain in Manhattan to Dunkin.
The company is reported to close more than 20 locations in Los Angeles, 15 in Chicago, 7 in San Francisco, 6 in Minneapolis, and 5 in Baltimore this year; closures of dozens of stores are also expected in other cities.
While store closures continue across the U.S., there has been no statement from Starbucks regarding the impact of these decisions on the European and Turkish markets.
The impact of remote work is prominent in the closure decisions. Major cities like New York, Chicago, Los Angeles, and San Francisco experienced population loss after the pandemic in 2020; this reduced their market sizes. Although cities have started to reverse these losses from 2023 onwards, the remote work arrangement has permanently affected Starbucks locations, especially those operating in central business districts.
According to Catherine Yeh, market analysis director at CoStar Group, the decrease in office worker density due to remote work has made the sustainability of many Starbucks locations in city centers challenging. For this reason, the company has closed some of its downtown stores in Los Angeles.
It was stated that Starbucks is also uncomfortable with being perceived as the “preferred public toilet provider” in many American cities, and this has increased operational pressure in some locations.
