Why is Starbucks Closing Stores in the US When Customers Are Coming Back?

The customers are coming back. Some of the coffee shops are going away.

That is the apparent contradiction at Starbucks: a fresh round of roughly 250 North American closures alongside improving sales. Globally, the company is changing how it operates in China and developing its business in India.

The question is bigger than how many green signs disappear. Can Starbucks deliver the speed customers expect while preserving the experience that makes them willing to pay a premium?

What exactly is closing?

Starbucks announced on September 24 that about 250 North American coffeehouses would close. Chief operating officer Mike Grams said the locations either could not consistently deliver the intended customer and employee experience or lacked a path to acceptable financial performance.

Against more than 18,000 North American stores, that is roughly 1.4% of the footprint. Starbucks describes it as approximately 1%. The company says affected employees will be offered transfers where possible, with severance support for those it cannot place elsewhere. It has not disclosed a complete workforce impact in that announcement.

Didn’t Starbucks already do this?

Yes. Its FY25 restructuring included 627 store closures, more than 90% in North America. The broader programme was expected to cost about $1 billion. The latest action adds approximately $300 million in restructuring charges: about $200 million in cash costs, principally lease exits and employee separation benefits, and $100 million in non-cash asset charges. Repeated closures show that the assessment of which stores can support the turnaround is continuing.

How can sales rise while stores close?

Because chain-wide recovery does not make every location viable.

In the quarter ended June 28, 2026, US comparable-store sales rose 7.9%. Transactions increased 4.2%, while average spending per transaction rose 3.6%. The transaction increase matters: the improvement includes more purchases, rather than simply higher spending on each order.

Comparable-store sales measure an eligible group of established outlets, not the change in the entire store network. A chain can improve sales in that group while shutting weaker locations.

The distinction also explains a misleading detail in the initial report. Starbucks now forecasts approximately 440 net new global stores for FY26, down from 600–650. That means openings after subtracting closures, not just 440 openings. It still expects its worldwide network to grow.

What went wrong in America?

The coffeehouse experience became harder to deliver consistently.

Reuters has identified long waits, a complicated menu and ineffective promotions among the problems confronting Brian Niccol when he became chief executive in September 2024.

For a premium café chain, these are fundamental weaknesses. A familiar logo can persuade someone to try a drink; it cannot indefinitely compensate for an unreliable visit. The strategic problem is straightforward: Starbucks must make convenience and hospitality work together. If the customer pays for a premium experience but encounters a slow transaction, the reason to return becomes less compelling.

What does “Back to Starbucks” actually involve?

Much of it concerns the everyday mechanics of running a café.

The company’s Green Apron Service model invests in staffing, equipment and operating routines. Its Smart Queue system sequences café, mobile, drive-through and delivery orders. At its January investor event, Starbucks said average peak service times across café and drive-through locations had fallen below four minutes.

It also set a goal of adding more than 25,000 café seats across the US by the end of FY26. The company has brought renewed emphasis to cup writing, ceramic mugs and refills for customers staying in the café. The commercial logic is to make Starbucks useful for both the customer rushing to work and the customer who wants somewhere to sit. Executing both experiences through the same counter is the difficult part.

Is the turnaround working?

The latest results provide evidence of progress. Global comparable sales rose 7.9% in the June quarter. Adjusted operating margin reached 14.4%; the reported accounting measure was 10.5%. Starbucks ended the quarter with 41,304 stores worldwide.

Those numbers support a recovery argument, but the financial measures need care. Adjusted margins exclude specified items; they are not interchangeable with reported margins. Ownership changes also affect comparisons.

The test now is whether improved demand can sustain the spending needed to deliver better service. A busy coffeehouse still needs to earn enough after staffing, occupancy and other operating costs.

Why has Starbucks handed majority control in China to a partner?

It is changing its operating model in a fiercely competitive market.

Under the deal whose completion Starbucks announced in April, Boyu Capital holds 60% of the China retail business and Starbucks retains 40%, along with ownership of its brand and intellectual property. Approximately 8,000 coffeehouses moved into a licensed joint-venture structure. The partners have a long-term ambition to reach as many as 20,000 locations. Reuters reports that lower-priced domestic competitors, including Luckin and Cotti, have taken market share. The partnership gives Starbucks a route to local expertise and expansion while sharing ownership of the retail operation. It also places greater weight on the partner’s ability to adapt the offer to Chinese customers.

Does falling international revenue mean overseas customers are disappearing?

Not necessarily. China’s ownership change creates a major accounting break. Starbucks reported a 34% fall in international segment revenue to $1.3 billion in the June quarter, primarily because of the China transition.

Previously, Starbucks consolidated the Chinese stores’ retail revenue and expenses. Under the new arrangement, it records its share of joint-venture earnings and receives revenue associated with licensing and supplying the business.

The same branded café can continue serving customers while contributing differently to Starbucks’ reported accounts. Reading the revenue decline as an equivalent collapse in demand would be misleading.

What is happening in India?

India offers its own version of the distinction between sales growth and store growth.

Tata Consumer Products reported that Tata Starbucks revenue increased 11% in the quarter ended June 30, supported by strong same-store sales growth. Four stores opened during the quarter, including Reserve outlets in Kolkata and New Delhi. The business ended June with 498 stores.

That compares with 502 at the end of March. The disclosed totals therefore show a smaller network alongside higher revenue; the June release does not fully explain the movements behind the store count.

India is also becoming more important beyond cafés. Reuters reported on September 21 that Starbucks planned a technology centre in Chennai, with approximately 800 technology professionals.

What about boycotts and employee disputes?

They are part of the picture, but should not be used as a universal explanation for closures.

In March 2024, Reuters reported that Middle East franchise operator Alshaya planned more than 2,000 job cuts amid business pressure from Gaza-war-related consumer boycotts. That was a specific regional development at a particular time.

Separately, Starbucks’ US union dispute remains unresolved: Reuters reported in September 2026 that a first contract had not been reached and the union had called for a consumer boycott in August.

Neither establishes that the newly announced 250 closures were caused by a boycott. The stated reasons concern store experience and financial viability.

What should we watch next?

Watch whether transaction growth continues, whether margins hold after the costs of better service, and whether new stores produce durable returns.

In China, the test is whether local ownership improves competitiveness. In India, it is whether sales momentum translates into profitable expansion. For employees, the immediate questions concern transfers, job security and working conditions.

Starbucks is trying to restore the value of an everyday ritual. Its recovery will be decided each time a customer receives a drink, looks around the café and decides whether the visit was worth paying for again.

With inputs from ANI & agencies