Starbucks is about 70% of the way through its restructuring plan, which involves the closure of about 800 stores in North America’s dense metropolitan areas.
It's "clearing the way for the development of new, innovative and more efficient retail store formats over time," said CEO Kevin Johnson during a second-quarter earnings call last month.
Dubbed the Trade Area Transformation, the plan announced in early 2020 was to focus on new store formats that better cater to changing customer trends, such as pick-up and drive-thru. Starbucks planned to execute this strategy over a three- to five-year period, but it was sped up due to the pandemic and changing customer habits.
"Although we expect this portfolio optimization will yield net new store growth for the Americas in fiscal 2021, this will have a moderately negative impact on Americas revenue through next fiscal year," said spokesperson Reggie Borges in an email.
The total costs associated with restructuring are between $30 million and $40 million, according to a late April filing with the Securities and Exchange Commission. Starbucks attributed some of the costs to ending leases prematurely and terminating employees. Starbucks typically closes about 100 stores in the Americas each year due to expiring leases or other market conditions, Borges said.