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.
Related: Forget CosMc’s, Chick-fil-A has a plan to take down Starbucks
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
[ad_2]
]]>Spirit Airlines will keep flying after filing for Chapter 11 bankruptcy restructuring on Friday, just five months after exiting its last restructuring.
The Dania Beach, Florida-based budget airline said in a letter to flyers that it will continue flying, and that they can continue to use all “tickets, credits and loyalty points.” All other passenger benefits, including Savers Club and credit card perks, remain available for use as well.
“It has become clear that there is much more work to be done and many more tools are available to best position Spirit for the future,” said Dave Davis, president and CEO of Spirit, in a statement Friday. “After thoroughly evaluating our options and considering recent events and the market pressures facing our industry, our Board of Directors decided that a court-supervised process is the best path forward to make the changes needed to ensure our long-term success.”
Spirit lost $186 million during the three-and-a-half months from mid-March, when it exited its last bankruptcy restructuring, through the end of June. That is normally a peak time for budget travel that includes spring break.
The airline warned investors on Aug. 11 that there was “substantial doubt as to the company’s ability to continue as a going concern within 12 months.”
Davis said Spirit plans to undergo a “comprehensive” restructuring this time. Its last bankruptcy filing in November 2024 focused primarily on the carrier’s debt.
Reward your inbox with the TPG Daily newsletter
Join over 700,000 readers for breaking news, in-depth guides and exclusive deals from TPG’s experts
Spirit said in a statement that comprehensive restructuring would include a route map redesign centered on key focus cities, shrinking the airline’s fleet, and reducing costs.
The airline’s five largest destinations by flights in the third quarter, based on schedules from aviation analytics firm Cirium, are:
- Fort Lauderdale-Hollywood International Airport (FLL)
- Orlando International Airport (MCO)
- Harry Reid International Airport (LAS) in Las Vegas
- Detroit Wayne County Metropolitan Airport (DTW)
- Newark Liberty International Airport (EWR)
- Spirit’s schedule is more than a quarter smaller during the three months ending in September compared to the same period in 2024, Cirium data shows.
The carrier flew 215 Airbus A320-family planes at the end of June, its latest quarterly financial filing shows.
Other airlines are not waiting for Spirit to restructure or, in a worst-case scenario, fail. Frontier Airlines recently unveiled 20 new routes that include many in Spirit markets. And analysts believe other carriers, including JetBlue Airways, Sun Country Airlines and United Airlines, could be interested in Spirit’s gates and facilities at various airports like FLL and DTW.
Related reading:
[ad_2]
]]>Known for its bright-yellow livery and status as one of the country’s most longstanding low-cost airlines, Spirit Airlines (SAVE) has in recent years run into financial difficulties that call into question its entire existence.
While the airline was able to emerge from the Chapter 11 protection it requested at the end of 2024 by converting $795 of debt into equity, Spirit is still struggling with quarterly losses and an inability to generate enough revenue to cover operational costs.
Related: JetBlue cuts flights to two airports, offers refunds
In a quarterly Securities and Exchange Commission filed on Aug. 12, Spirit Airlines leadership admitted that there is “substantial doubt as to the company’s ability to continue.”
Although the airline had already taken numerous cost-cutting measures such as furloughing or demoting over 400 pilots, pushing out executives like former CEO Ted Christie, and cutting unprofitable routes, it ultimately failed to make a substantial dent in debts owed to creditors.
“We remain hard at work on many initiatives”: Spirit Airlines
The $245.8 million loss that Spirit posted in the second quarter of 2025 is, despite the cost-cutting and restructuring, still greater than the $192.9 million one reported at the same period in 2024. At the time of the first bankruptcy, Spirit had over $3.8 billion in total debts.
In a scoop reported by the Wall Street Journal, Spirit Airlines is now also exploring a second restructuring among other efforts to avoid having to close up shop and cease operations.
It is also reportedly working with financial consulting firms FTI and Seabury Airline Group in figuring out how to go forward.
Related: After bankruptcy, Spirit Airlines is running out of time, money
Spirit, meanwhile, declined to comment on the speculation and instead said that it is working to improve its current finances.
A separate regulatory filing shows that Spirit borrowed an additional $275 million under a revolving loan agreement and reworked its card-processing agreement with U.S. Bank to offer more protection in the event of another bankruptcy but in response limit how many card payments can be made a day.
“We remain hard at work on many initiatives to protect our business, valued team members, partners and guests,” an airline spokesperson said in a statement. “Our focus is on making the necessary changes to better position the company and build a stronger airline. Our guests can continue to book and travel with us with confidence.”
Image source: Veronika Bondarenko
“The company has continued to be affected by adverse market conditions”: Spirit SEC filing
Additional cost-cutting efforts committed to by Spirit include trimming down its fleet and selling off airport gates it is not using. But as it does all that, the low-cost carrier also limits the number of flights it can run when increased traffic is the main way it can bring in more revenue.
It thus faces separate challenges of needing immediate liquidity to pay down debt and avoid defaulting, while also needing to plan for the long-term with flights and services that keep it competitive with other airlines serving similar markets.
More on travel:
- Another regional airline cancels all flights, no refunds
- US government issues sudden warning on Switzerland travel
- Another country just issued a new visa requirement for visitors
“The Company has continued to be affected by adverse market conditions, including elevated domestic capacity and continued weak demand for domestic leisure travel in the second quarter of 2025, resulting in a challenging pricing environment,” Spirit wrote further in the Aug. 12 filing.
(The Arena Group will earn a commission if you book a trip.)
Make a free appointment with TheStreet’s Travel Agent Partner, Postcard Travel, or email Amy Post at [email protected] or call or text her at 386-383-2472.
[ad_2]
]]>