Starbucks is closing the storefront and keeping the drive-through

Starbucks will close 250 stores across North America this week, the second mass round since Brian Niccol became chairman and chief executive in 2024, and chief operating officer Mike Grams told employees in a letter that the locations are underperforming financially or cannot deliver the experience the company wants for customers and staff. The announcement did not say which of North America's roughly 18,300 stores are on the list, though the round arrives inside the $1 billion "Back to Starbucks" restructuring Niccol launched against declining sales, heavier competition and a union campaign that now reaches 700 U.S. stores with no labor agreement reached.

A little more than a year ago the company closed 627 North American and European stores alongside 900 non-retail jobs, and in May it announced 300 layoffs among U.S. corporate employees plus the shutdown of underused regional offices. The same overhaul includes thousands of store retrofits, 1,500 of them due for completion by Sept. 30, and Grams's letter repeated the company's commitment to growing its North American store count, which leaves a company shrinking and promising to grow at once—so the portfolio is being sorted, and the sort is a real estate question.

New York has already voted on part of it. Starbucks led the city in chain store closures last year, shutting 42 locations between late 2024 and late 2025, and retail analysts told Commercial Observer that those urban casualties share a profile: footprints too small to carry the format Starbucks now wants, in districts where post-pandemic foot traffic never came back. Both problems separate the urban coffeehouse from the drive-through store, where the lane and the car count outlast anyone's merchandising.

The split now belongs to landlords and lenders. A drive-through box on a grocery-anchored strip re-leases to the next coffee brand, bank branch or quick-service operator, because the parcel rather than the tenant is doing the work. The urban storefront is a wager on pedestrian density, and a 250-store list re-prices it, the way Manhattan's Class B leasing climbed back above its pre-pandemic average only where owners funded an amenity standard. Starbucks' closing boxes are, by the analysts' account, too small to absorb the renovation that would buy the traffic back.

Roughly 1.4 percent of the North American fleet closes, spread across markets the company has not named, and small footprints leave the re-leasing case to a narrow set of tenants willing to work inside the same constraints. The 1,500 retrofits finish by Sept. 30, and the formats those remodels favor will say more about the next closure list than anything in Grams's letter.