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

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When a retailer has filed for Chapter 11 bankruptcy but intends to close some stores while keeping other open, it creates a challenging operating environment. It’s important, at least at the locations that aren’t closing, to look like nothing is wrong.

Nobody will place an order and put down a deposit on a piece of furniture or some other expensive item if they don’t believe the store will actually make that delivery. At normal price, consumers won’t risk having their orders sitting in warehouses because they paid for delivery, but the company did not pay the delivery bill.

Related: Costco made a major payment/credit change members love

That dual existence is happening right now with At Home. The retailer has filed for Chapter 11 bankruptcy, but it does plan to close 29 of its 229 stores across 39 U.S. states as part of the bankruptcy process. 

In stores that are not closing, and on the company’s website, there’s no mention that anything might be wrong. The chain greets people with an upbeat message that does not mention that a wrong turn in the Chapter 11 bankruptcy proceedings could force a broader, or even a complete, shutdown.

“For over 46 years, At Home has been a trusted destination for stylish, approachable design — offering everything a decorator may need to transform their space into a true reflection of who they are, how they want to live, and the memories they aim to create at home. Discover everything for every room, from Furniture, Rugs and Décor to Bedding, Bath, Outdoor and more. Explore curated collections, incredible seasonal selections and unique pieces that show off your signature style. Design your life At Home.”

For the 29 locations slated to close, however, the message is very different. 

“All sales are final,” “no returns accepted,” and other similar language fills those locations.

At Home closing roughly 10% of its stores

After filing for Chapter 11 bankruptcy on June 16, At Home will close 29 “underperforming” stores by Sept. 30. Some may close sooner if they run out of merchandise. 

All fixtures are being sold as well.

At Home has taken significant steps to survive its Chapter 11 bankruptcy. It shared in a press release:

“The company has entered into a Restructuring Support Agreement (RSA) with lenders holding more than 95% of the Company’s debt that sets forth terms of a prearranged financial restructuring that will eliminate substantially all of the company’s nearly $2 billion in funded debt and provide a capital infusion of $200 million to support the Company through its restructuring process and beyond.” 

New CEO Brad Weston also revealed some of the steps the company has already taken.

“Over the past several months, we’ve taken deliberate steps to strengthen the foundation of our business — sharpening our focus, elevating our customer value proposition, and driving operational discipline. These efforts are aimed at delivering sustained sales growth, optimizing our inventory management, improving efficiency, and enhancing overall profitability,” he shared in the press release.

Closing stores is an unfortunate, but necessary part of that project.

These are the 29 closing At Home locations:

• 6135 Junction Boulevard in Rego Park, New York
• 300 Baychester Ave. in Bronx, New York
• 750 Newhall Drive in San Jose, California
• 2505 El Camino Real in Tustin, California
• 14585 Biscayne Boulevard in North Miami, Florida
• 2200 Harbor Boulevard in Costa Mesa, California
• 3795 E. Foothills Boulevard in Pasadena, California
• 1982 E. 20th St. in Chico, California
• 2820 Highway 63 South in Rochester, Minnesota
• 26532 Towne Center Drive Suites A-B in Foothill Ranch, California
• 1001 E. Sunset Drive in Bellingham, Washington
• 8320 Delta Shores Circle South in Sacramento, California
• 1361 NJ-35 in Middletown Township, New Jersey
• 2900 N. Bellflower Boulevard in Long Beach, California
• 720 Clairton Boulevard in Pittsburgh, Pennsylvania
• 2530 Rudkin Road in Yakima, Washington
• 571 Boston Turnpike in Shrewsbury, Massachusetts
• 5203 W. War Memorial Drive in Peoria, Illinois
• 8300 Sudley Road in Manassas, Virginia
• 461 Route 10 East in Ledgewood, New Jersey
• 301 Nassau Park Boulevard in Princeton, New Jersey
• 300 Providence Highway in Dedham, Massachusetts
• 905 S 24th St. West in Billings, Montana
• 19460 Compass Creek Parkway in Leesburg, Virginia
• 3201 N. Mayfair Road in Wauwatosa, Wisconsin
• 13180 S. Cicero Ave. in Crestwood, Illinois
• 5101 Fashion Drive in Nanuet, New York
• 2100 S. Randall Road in Geneva, Illinois
• 2201 Zeier Road in Madison, Wisconsin

Source: Court filing

“Macroeconomic issues, including a rapid and dramatic rise in interest rates, persistent inflation, and concerns over unsustainable customs costs resulting from increased tariffs all placed significant pressure on the debtors’ revenue and cost structure,” At Home said in a court filing. “Retailers specifically contend with reduced foot traffic in stores, heightened competition from comparable and off-price retailers offering substantial discounts, and a disparity between inventory and customer demand” as the reasons for the closures. 

Fewer homes are being bought

High interest rates have led to a slowdown in home purchases.

“For the first time in years, home prices are failing to keep pace with broader inflation,” Nicholas Godec, head of fixed-income tradables and commodities at S&P Dow Jones Indices, said in a statement to Marketwatch.

Even though housing prices are flat or down, demand has been weak.

“National house prices have effectively gone sideways so far this year. This means house prices are falling in about half the nation’s housing markets, mostly in the South and western U.S.,” Mark Zandi, chief economist at Moody’s Analytics, told MarketWatch.

“This reflects extraordinarily weak housing demand and a modest increase in existing and new housing supply,” he added. Hence, he said, “Housing will be an increasing headwind to broader economic growth.” 

At Home store closure policies 2025

• Discounts Up to 30%: All merchandise, fixtures, and store equipment are being sold at discounts up to 30% until all inventory is cleared.
• Final Sales: All sales are final on purchases made on or after August 1, 2025.
• Gift Cards and Rewards: Gift cards, gift certificates, loyalty, and credit card rewards are no longer being accepted at closing stores, but can be used at other stores or online.
• Store Fixtures and Equipment: Store fixtures and equipment are also for sale during the liquidation process.
• Store Operations: Closing stores will remain open during their normal operating hours until closure.

Source: Press release

Related: Popular Technology Retailer Closing Dozens of Stores

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The U.S. drugstore retail sector is facing a major transformation with huge pharmacy retailers downsizing operations to cut costs and some filing for bankruptcy. 

America’s largest drugstore chains have closed hundreds of store locations over the last four years to reduce labor costs, eliminate above-market leases, plug leakage from theft, and shut down underperforming stores.

Some of the nation’s smaller pharmacy chains, facing similar financial distress, have been forced to file for bankruptcy protection to restructure debt.

Related: Popular pizza and beer chain files for Chapter 11 bankruptcy

Giant drugstore chain Rite Aid, however, filed for Chapter 11 bankruptcy for the first time on Oct. 15, 2023, and closed about 800 of its 2,100 stores in a reorganization.

The pharmacy chain’s surviving entity, New Rite Aid LLC, filed for Chapter 11 protection a second time on May 5, 2025, and began closing all of its stores, estimated at about 1,240 locations at the time.

Rite Aid files bankruptcy notice to close the last of its stores

Rite Aid is approaching the end of its existence as it filed its 14th notice of additional store closing locations with the U.S. Bankruptcy Court for the District of New Jersey on July 25, seeking approval to close 17 more stores and liquidate their assets, which adds to previously designated locations for closing in its second bankruptcy, for a total of 1,237 stores.

The debtor has not indicated if any additional stores remain to be closed.

The retailer already filed its final location closing order on July 10.

Rite Aid’s 14th additional closing notice consists of store closures in five states, including Washington (11), New York (3), California (1) Oregon (1), and Pennsylvania (1).

Objections to the 14th closure notice are due by Aug. 4.

Rite Aid closures by state:

• California (348)
• Connecticut (15)
• Delaware (29)
• Idaho (7)
• Maryland (23)
• Massachusetts (4)
• New Hampshire (47)
• New Jersey (61)
• New York (178)
• Ohio (4)
• Oregon (36)
• Pennsylvania (352
• Vermont (5)
• Virginia (26)
• Washington (102)

Rite Aid on July 21 filed its 13th notice of additional store closing locations, seeking to shutter one location in Colonial Heights, Va.

Objections to the 13th notice are due by July 31. 

Rite Aid already filed 14 notices of store closing locations with the original notice and an additional closing notice on May 9, followed by additional closing notices on May 15, May 23, May 30, June 6, June 13, June 20, June 27, July 3, July 11, July 18, and July 21.

Related: Beloved beer brand files Chapter 11 bankruptcy

The first 14 groups of store closings listed 1,220 locations in 15 states, including Pennsylvania (351), California (347), New York (175), Washington (91), New Jersey (61), New Hampshire (47), Oregon (35) Delaware (29), Virginia (26), Maryland (23), Connecticut (15), Idaho (7), Vermont (5), Massachusetts (4), and Ohio (4). 

Another major drugstore chain, CVS, in 2021 started its downsizing campaign when it said it would close 900 of its nearly 9,900 stores to reduce costs and cut losses, closing 300 locations each year in 2022, 2023, and 2024.

The company extended the downsizing campaign into 2025, revealing in its annual report in February that it would close 271 more stores this year.

Walgreens, which operates about 8,600 stores, evaluated 2,000 stores for potential closure and identified 1,200 locations to shutter over the next three years, with 500 set to close in fiscal year 2025.

Drugstore chain location closings:

• CVS: 1,171 store closings 2022-2025.
• Walgreens: 1,200 store closings 2025-2027.
• Rite Aid: 2,037 store closings 2023-2025.

Closing stores wouldn’t be enough for several smaller drugstore chains that have opted for Chapter 11 bankruptcy to reorganize their businesses.

Smaller pharmacy bankruptcy filings

Eastern Kentucky drugstore chain Rx Discount Pharmacy, with about seven pharmacy and healthcare businesses, on May 1, 2024, filed for Chapter 11 bankruptcy reorganization.

CL Cressler Inc., the owner of seven Medicine Shoppe Pharmacy stores located in Pennsylvania and New York, on Aug. 29, 2024, filed for Chapter 11 bankruptcy to reorganize its debts.

Finally, in Arkansas, drugstore chain Doctor’s Orders Pharmacy on July 21 filed for Chapter 11 bankruptcy, as its parent Whitehall Pharmacy LLC faced a breach of contract lawsuit.

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