Starbucks plans to close approximately 250 North American coffeehouses during the week of September 24, even as its latest quarterly results show more customer transactions across the region.
Chief operating officer Mike Grams announced the decision September 24. He said the company had identified stores that could not consistently deliver its desired experience or lacked a path to acceptable financial performance. Starbucks’ announcement
The contrast with the sales numbers is striking. North American comparable-store sales rose 8.1% in Starbucks’ fiscal third quarter, which ended June 28. Comparable transactions increased 4.5%, while average ticket rose 3.5%. The 8.1% figure applies to North America; U.S. comparable sales increased 7.9%. Starbucks’ quarterly results
Those measures answer a different question from a store-closing decision. Comparable sales describe changes across an eligible group of established stores. They cannot show whether a particular lease, layout or local sales pattern supports a viable coffeehouse.
Starbucks includes company-operated locations open at least 13 months in its comparable-sales measure, subject to the exclusions described in its earnings release. It is not a growth rate for every Starbucks location worldwide. Quarterly results
The company is also continuing renovations and new-store development. Grams said Starbucks was accelerating toward 1,500 coffeehouse upgrades and maintaining a pipeline of new North American locations. Starbucks
Braisepoint’s operating view: A turnaround has to work at two levels. A brand can win back customers overall while still having individual sites that do not support the experience or economics management wants.
For operators, the useful lesson is to examine the store beneath the regional average. More transactions are encouraging, but the decision to reinvest also depends on what a particular location needs to serve those customers well. A stronger brand does not make every building equally suitable.
There is a human consequence to that calculation. Starbucks says it will seek transfers for affected employees where possible and provide severance support when it cannot place them elsewhere. Starbucks
The closure announcement reviewed for this story does not include a complete location list. Customers should check their own store’s current information before assuming it is affected.
Future results will help show how Starbucks performs with a revised footprint. The current evidence supports a narrower conclusion: regional demand improved in the reported quarter, while management still found stores it plans to exit.
File photo: “Starbucks - Coffee Shop,” Minnetonka, Minnesota, February 2019. This location is not identified here as one of the closures. Photo © Tony Webster / [Flickr](https://www.flickr.com/photos/diversey/47061452362/), [CC BY 2.0](https://creativecommons.org/licenses/by/2.0/). Unaltered publisher-sized image.
