Starbucks' planned store closures in US increase by 100

Starbucks is closing an additional 100 US locations to bring to 500 the number of cafes it would shut in the country next year to shift from poorer performing urban markets.

The locations are part of 800 planned closures in the Americas over the next year, including 300 in Canada.

While the closures will be more than offset by 850 openings in the Americas, the 50 new locations represent a dramatic slowdown from Starbucks' typical pace.

The Seattle-based coffee giant added nearly 300 stores in the fiscal year ended Sept. 27, even though half of that time was filled with a pandemic.

Starbucks operates 15,337 stores in the US and over 32,000 globally.

Executives said they opted to close more locations after realizing they could do so more efficiently regarding average lease exit costs.”

Starbucks is contending with dramatic consumer shifts during the pandemic.

Consumers are working from home and are ordering less often but making bigger orders when they do.
They are also flocking to locations with drive-thrus, especially in late mornings during their breaks or on weekends.

CEO Kevin Johnson noted transactions have migrated from cafes to drive-thrus, from early mornings to midmornings with outpaced recoveries on weekends, and from dense metro centers to the suburbs.

The company plans to open more takeout-only Starbucks Pickup locations while moving into more suburban areas that could host restaurants with drive-thrus.

Executives said that the closures of the underperforming locations will improve margins by 40 basis points.