Starbucks changes put the focus back on its customers

Some believe that for far too long, Starbucks prioritized the business itself over the loyal customers who made it an iconic brand. Now, the coffee giant is facing the consequences of its actions. 

"In trying to scale faster, Starbucks has drifted away from the emotional core that built its global following," Amazon Business Analyst Saswat Sidhant Prusty told Coffee Intelligence.

To fix its mistakes, the company has been making significant changes under its "Back to Starbucks" strategy, a turnaround plan designed to reverse declining sales by returning to its roots and creating a more personalized coffeehouse experience.

However, reinventing one of the world's largest coffee chains comes at a steep cost.

To streamline operations and reduce expenses, Starbucks has already closed multiple locations and eliminated thousands of corporate roles. Yet these restructuring efforts haven't been enough, and more cuts are coming.  

Starbucks reveals more layoffs and mass closures

Starbucks  (SBUX)  is now conducting another round of layoffs, slashing around 900 corporate positions. This follows February's reduction of roughly 1,100 roles in an effort to reduce complexity and improve efficiency. 

The coffee chain also plans to shrink its North American footprint by about 1% in fiscal 2025, taking its store count from 18,734 locations in the third quarter to around 18,300 by the end of September. 

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Most closures will occur before the year ends, eliminating locations that cannot be remodeled to fit the new design or those with weaker financial performance.

These shutdowns are part of Starbucks' effort to restore its stores as a "third place," turning them into a welcoming space between home and work. The goal is to encourage customers to spend more time in its stores, improve declining foot traffic, and boost sales.

This restructuring will cost Starbucks around $1 billion, with 90% of the expenses coming from the North America region.

Starbucks invests in its workforce

Despite layoffs at the corporate level, Starbucks is investing heavily in its store-level staff. Beginning this Fall 2025, most company-operated stores will gain at least one full-time assistant store manager to ensure consistent leadership and smoother daily operations. 

The company has also rolled out its "Green Apron Service" operating model, designed to standardize roster size, labor hours, peak coverage, and deployment across stores. This marks Starbucks' biggest-ever investment in customer service and operational consistency. 

Additionally, Starbucks implemented a new dress code for its baristas across all North American stores to enhance its iconic green apron, making it the first update in nearly a decade. 

Starbucks store revamps and new design

Beyond staffing, Starbucks launched the "Coffeehouse Uplift" as part of its long-term goal to invest about $150,000 per store and remodel 1,000 stores by the end of 2026. The company aims to upgrade locations with little to no downtime by slowing new builds and major renovations.

In August, Starbucks revealed plans to close all its pickup-only locations, as these no longer align with its strategy, and unveiled two new prototypes to replace the stores. There are currently around 90 locations nationwide, all in high-traffic areas, such as cities, airports, and hospitals.

Starbucks faces ongoing struggles

While these initiatives will take time to show results and regain lost customers, Starbucks continues to face challenges as it manages high restructuring costs and ongoing declines in sales and traffic.

In the third quarter of fiscal 2025, U.S. comparable sales fell 2%, driven by a 4% transaction drop.

Meanwhile, its competitors are slowly winning over customers. In the first quarter of 2025, Dutch Bros.  (BROS)  reported a 13.4% increase in traffic, Scooter's Coffee grew by 15.3%, and 7 Brew Coffee saw a 87.3% surge, according to Placer.ai. 

In contrast, Starbucks experienced a nearly 1% decline in visits compared to the previous year.

"Starbucks isn't just facing short-term pain," said Sidhant Prusty to Coffee Intelligence. 

"It's confronting a deeper misreading of consumer sentiment. While operational efficiency and digital convenience have improved, they've come at the cost of the in-store experience that once defined the brand."

Related: Starbucks shares bold plan to change in-store experience