Starbucks Announces Store Closures and Layoffs Amid Restructuring Efforts

Starbucks has announced a $1 billion restructuring plan that includes closing over 100 underperforming stores across North America and laying off approximately 900 corporate employees.

The store closures represent about 1% of the company's North American locations, with the flagship Capitol Hill Roastery in Seattle among those affected.

In addition to the retail staff cuts caused by the store closures, the company announced that 900 non-retail employees would be laid off.

Starbucks sent documents of its severance package to laid-off retail employees on Sunday, which Business Insider has viewed.

According to a Starbucks document titled "Severance Summary," laid-off baristas and shift supervisors would be entitled to 60 and 84 hours of pay, respectively.

Starbucks baristas earn about $15 to $22 an hour, depending on the store's location in the US, per job listings on Starbucks' careers website. Shift managers earn roughly between $20 and $29 hourly.

Café attendants — entry-level service staff in charge of keeping the cafés clean and organized — would be entitled to 30 hours of pay after being laid off, per the document.

States do not typically require companies to provide hourly workers with severance.

Laid-off retail staff can also claim a lump sum payment equal to three months' worth of their health insurance premiums. Affected staff have healthcare coverage for three months from the end of October, which is in line with the Department of Labor's COBRA Act.

The document said employees would get 45 days to decide whether to sign a release agreement in exchange for their severance pay.

In a separate document titled "Partner Separation FAQ — U.S. Retail Stores," seen by Business Insider, Starbucks said that employees in nine states would be paid for their accrued vacation hours. Employees with granted but unused vacation hours will not be paid out for unused time.

In response to a request for comment, Starbucks directed Business Insider to CEO Brian Niccol's open letter from Thursday.

"We're working hard to offer transfers to nearby locations where possible and will move quickly to help partners understand what opportunities might be available to them," Niccol wrote in the letter. "For those we can't immediately place, we're focused on partner care including comprehensive severance packages."

In an SEC filing dated September 23, Starbucks said it expected to incur a $1 billion bill from its store closures. It said about $150 million of that cost would be linked to employee separation benefits.

The store closures are part of Niccol's "Back to Starbucks" turnaround plan, which aims to revitalize the chain after several quarters of declining sales.

The company said in the SEC filing that it had assessed its stores' financial performance and customer experience and decided to close stores that had not fulfilled the criteria.

Starbucks' stock price is down more than 14% in the past year.