Why Starbucks Will Close 150 Stores Next Year
This is three times more store closures than in a typical year.
It might feel like there’s a Starbucks on every corner in America, but next year, there will be fewer stores on fewer corners—150 fewer, to be exact. After seeing a slump in growth, the company has announced that it will be closing 150 stores in 2019.
According to CNN, “poorly performing” stores around the country will be getting the ax. Most of the stores slated for closures are located in big cities, where there is already an overabundance of Starbucks cafes. As of right now, there's no word on which cities will be affected by the change. Still, given that there are 13,930 Starbucks stores in America (as of last year), 150 is just a drop in the bucket.
In a statement, Starbucks CEO Kevin Johnson said that the company’s recent growth—expected to hit just 1 percent in the quarter beginning next month—is “unacceptable” and the company will need to “move faster,” in order to meet the needs of customers.
Johnson also admitted that a recent incident in Philadelphia, during which two African-American men were arrested in a Starbucks while waiting for a friend, did damage the company’s reputation. The company recently closed 8,000 Starbucks locations to conduct a racial bias training in order to prevent future race-based incidents in stores. As a result, the café bathrooms are open to everyone—not just paying customers.
The company also suggested that the massive closures “had an impact” on the slump in sales. Back in May, outgoing CEO Howard Schultz admitted that closing those stores would cost the company “tens of millions of dollars,” but that he didn’t view the training as a loss.
Another decline in sales came from the Frappuccino, which has seen a 3 percent dip in sales so far in 2018, despite new additions, like the Serious Strawberry Frappuccino. For comparison, in 2017 Frappuccino sales were up 4 percent, and in 2015 they were up a whopping 17 percent. Moving forward, the company will double down on healthier options, like low-sugar iced tea. They also just raised the price of a regular cup of coffee by about 20 cents, taking the price to at least $2 per cup.