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Starbucks to Close 600 U.S. Stores

Lagging economy, increased competition take their toll

July 2, 2008 

The company said the shops slated for shutdown had been "under performing." Starbucks will also thin its employee ranks by about seven percent.

Over the last several years Starbucks opened hundreds of locations across the country to boost sales growth and take traffic from stores where long lines were losing customers. Even with the closings, there will still be more than 10,000 Starbucks stores nationwide.

The company's sales have been hurt by the lagging economy and by increased competition from McDonald's, Dunkin' Donuts and other outlets that have spruced up their coffee and beverage service.

The majority of the store closures are scheduled to occur during the remainder of fiscal 2008 and the first half of fiscal 2009. Both full-time and part-time retail positions will be eliminated, however the company said it expects to place many of the affected employees into available positions at nearby Starbucks stores.

"Throughout the history of the company, we have always aspired to put our people first. This makes our decision to close stores difficult, because it is disrupting the lives of the people who have worked so hard to deliver superior service to our customers," Starbucks CEO Howard Schultz said.

The stores identified for closure are spread across all major U.S. markets with approximately 70 percent of them opened since the beginning of fiscal 2006, Starbucks said.

What if your favorite Starbucks is one of the stores targeted for closing? Starbucks says it will reach out to customers who are impacted by the store closures in a variety of ways, including directing them to the Starbucks Store Locator on the company's Web site.

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