Starbucks plans to scale back store openings in 2025 as the embattled coffee giant focuses on redesigning its existing cafes to stem sales declines and bring back customers.
In a call to discuss its earnings on Wednesday, the Seattle-based chain did not specify how many stores it now plans to open or renovate as its new CEO Brian Niccol works out details of a plan to bring "fundamental change" in response to several quarters of declining sales for the company.
Chief Financial Officer Rachel Ruggeri said on the call that "we plan to reduce the number of our new stores and renovations in fiscal year 2025 to accommodate a redesign, while also unlocking capital to support our broader turnaround."
The planned reduction in new openings comes less than a year after Starbucks rolled out plans to ramp up its global growth by opening 17,000 new stores by 2030.
Despite the planned pullback in the coming year, Starbucks opened 722 new stores in the quarter ended Sept. 30, a 37% jump over the previous quarter, but down from the 816 openings in the year-earlier quarter. The company has 40,199 company- and license-operated stores, with the U.S. and China making up 61% of the global store portfolio.
The company reported just under $9.1 billion in revenue in the most recent quarter, a 3% drop from 2023, while U.S. sales slipped 6%.
'Very disappointing'
Starbucks announced last week that it was suspending its annual financial outlook for 2025 due to the state of the company and the CEO transition, with Niccol leaving Chipotle Mexican Grill to take over the top slot at Starbucks in September.
"Our financial results were very disappointing, and it is clear we need to fundamentally change our strategy to win back customers and return to growth," Niccol said during his first earnings call with the coffee chain. “We have to make it easier for our customer to get a cup of coffee."
As part of Niccol's new "Back to Starbucks" plan, the company will simplify its menu and work to improve store staffing to fill orders in four minutes or less in response to customer complaints about long wait times, Niccol said. The company also in the past week told its employees they had to work in company offices or risk losing their jobs.
Niccol pledged not to raise prices at its U.S. stores in the coming year and to restore such features as condiment bars in dining rooms to improve its customers' experience.
Niccol’s record of turning around declining sales and adding locations at Chipotle was a key factor in Starbucks' decision to tap the retail veteran to head up the world's biggest coffee chain.
He will be in charge of staging a similar turnaround of Starbucks. The company has faced slipping demand in the face of growing competition from smaller, fast-growing independent chains such as Dutch Bros.
Niccol replaced Laxman Narasimhan, who stepped down as CEO and board director after about 16 months on the job. The new CEO has said he wants to bring back a time when Starbucks was simpler and cheaper to try and win back customers and boost falling sales.
“We have to get back to what has always set Starbucks apart — a welcoming coffeehouse where people gather and where we always serve the finest coffee,” Niccol said Wednesday.