Starbucks is deepening its corporate cuts with plans to shell out $400 million in restructuring expenses that will result in the closing of four regional offices across the United States.
The Seattle-based coffee giant released details on the latest step of its yearslong turnaround efforts. This time the plans include laying off another 300 corporate employees and shuttering underused hubs in Atlanta, Chicago, Dallas and the Los Angeles area, a spokesperson confirmed to CoStar News.
Those closings are intended to help "streamline our portfolio," the spokesperson said, adding that Starbucks will maintain a corporate presence in Seattle, New York, Toronto, the Miami area and Nashville, Tennessee, which will soon host its East Coast hub.
"We are streamlining our real estate footprint, including consolidating U.S. regional support office space and taking several other steps with leases and lease commitments," the spokesperson said. Starbucks is "building on our strong business momentum and working to return the company to durable, profitable growth."
The restructuring expenses are primarily due to termination fees associated with the office closings and severance for affected employees. It all lands within a year of Starbucks' last restructuring push, which involved laying off nearly 2,000 corporate positions and closing hundreds of underperforming stores.
The employees based at the offices slated to close will transition to remote work, the spokesperison said. That's in stark contrast to the bulk of Starbucks' corporate workforce, which is beholden to an in-office schedule that requires a Monday-to-Friday commute.
That mandate, coupled with other goals Starbucks has expressed as part of its turnaround push, has, until now, meant the coffee giant has ramped up investments in its office real estate portfolio.
Last month, Starbucks finalized one of the largest office deals in Nashville history as part of plans to invest more than $100 million to establish a corporate flag in the area. It is currently leasing temporary space in the city's Gulch neighborhood while it completes finish-out work on its new 250,000-square-foot space, a hub that is expected to house thousands of employees.
"Our new office in Nashville reflects three key advantages: proximity to key suppliers, access to a deep and growing talent pool in the region, notably in technology and alignment with where we expect future coffeehouse growth," Sara Kelly, Starbucks' chief partner officer, said in a memo to employees viewed by CoStar News. "We are committed to supporting strong in-office cultures across our geographic footprint, which is why intact teams will be based in the same location to maximize collaboration and impact."
Starbucks has already shifted its sourcing and parts of its technology teams, and expects others tied to its growth in the South and Eastern U.S. will soon follow suit.
'Repeatable and durable'
The future Nashville hub aligns with plans Starbucks unveiled earlier this year to strengthen its supply chain ahead of opening thousands of new locations, with the focus on the central, south and northeast regions of the country.
This year alone, Starbucks is on track to open as many as 650 new cafes worldwide, company executives said. It marks a stark course reversal after a period in which it shuttered hundreds of locations, laid off corporate employees and mapped out a strategic game plan as part of an effort to turn around what had been a struggling business.
Now, however, CEO Brian Niccol's sweeping turnaround plan appears to be working and is already "ahead of schedule."
Since taking over the company's top role in 2024, the CEO's plan has focused on inefficiencies and addressing customer complaints — efforts that now appear to be paying off.
Sales at U.S. stores open for a year or more jumped by about 7% in the first quarter compared to the prior year. Along with investing in its future Nashville hub, Starbucks is pumping serious capital into upgrading existing stores, updating technology, hiring more baristas and making other improvements aimed at bolstering its future growth.
"Our focus now is on sustaining our momentum and making our results repeatable and durable, all while delivering a healthy cost structure that supports profitable growth," Niccol recently told analysts. "It's how we turn progress into consistent results."