As part of a cost-cutting measure, Starbucks has announced that it will close its worst-performing locations in the US and lay off roughly 900 employees. It will also close some of its locations in the UK. According to the company’s chief executive, the redesign will shorten wait times and boost sales at the majority of the locations that are scheduled to close in North America.
It follows the coffee chain’s February announcement that it was cutting 1,100 employees and streamlining its US menu in an effort to boost sales in its home market. Chief executive Brian Niccol stated, “This is a more significant action that we understand will impact partners and customers,” even though the company claimed to be “on track” to establish 80 additional locations in the UK.
Some stores in the UK, Switzerland, and Austria will close as a result of this portfolio review, according to Starbucks, even though the EMEA [Europe, Middle East, and Africa] business is on track to reach its pledge to create 80 new stores in the UK and 150 across EMEA this fiscal year.
The locations designated for closure were “unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance,” according to a letter written by Mr Niccol to the staff.
The coffee giant announced in July that revenues at its locations in the US, its largest and most significant market, had decreased for the sixth consecutive quarter. The stores have been operating for at least a year. This year, the company’s stock has dropped more than 8%.
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