Over 100 Stores to Shut Down
Starbucks has begun issuing severance packages to its laid-off employees just days after announcing sweeping job cuts and store closures across North America. The Seattle-based coffee chain said last week it would close roughly 1% of its stores, more than 100 outlets in total, including its high-profile Capitol Hill Roastery in Seattle.
The closures are part of CEO Brian Niccol’s “Back to Starbucks” turnaround plan, which follows several quarters of declining sales. In addition to retail staff affected by closures, 900 non-retail corporate roles are being eliminated.
Details of the Severance Package
According to internal documents reviewed by Business Insider, laid-off baristas will receive 60 hours of pay, while shift supervisors will get 84 hours. Based on Starbucks’ posted wages, this amounts to between $900 and $1,848 for baristas, and $1,680 to $2,436 for shift supervisors, depending on location. Café attendants, who typically handle cleaning and organizational duties, will receive 30 hours of pay.
In addition, affected staff will receive a lump sum equivalent to three months of health insurance premiums. Health coverage will also continue for three months beyond October, in line with federal COBRA guidelines. Employees have 45 days to decide whether to sign a release agreement in exchange for their severance pay.
In nine states, Starbucks will also pay employees for accrued vacation time, though unused granted hours will not be compensated.
Financial Impact and Corporate Strategy
The company expects the restructuring to cost $1 billion, with $150 million tied directly to separation benefits, according to a recent SEC filing. Starbucks said the decision to close stores was based on financial performance and customer experience metrics.
CEO Brian Niccol emphasized in a letter that the company would attempt to transfer workers to nearby locations where possible. “For those we can’t immediately place, we’re focused on partner care including comprehensive severance packages,” he wrote.
Challenges for the Coffee Giant
The layoffs and closures highlight the mounting pressure on Starbucks, whose shares are down more than 14% over the past year. Despite its global brand recognition, the company has struggled with slowing sales growth, operational inefficiencies, and rising costs.
The restructuring underscores Niccol’s effort to revive the chain and reassure investors. Still, with large-scale layoffs and the shuttering of flagship locations, Starbucks faces the challenge of stabilizing both its workforce and customer loyalty in the months ahead.