Starbucks, the world’s largest coffee chain, can be found on nearly every street corner in major U.S. cities. But heading into 2026, the company closed hundreds of locations as part of a $1 billion restructuring effort.
Why is Starbucks closing hundreds of locations?
According to CNN, Starbucks became successful by rapidly expanding in urban markets, particularly New York City and Los Angeles. However, due to its recent challenges, the company will close about 400 stores in those areas to address increased competition, remote work and higher costs.
The company has already closed 42 locations in New York City and 20 more in Los Angeles this year; 15 in Chicago; seven in San Francisco; six in Minneapolis; five in Baltimore; and dozens more in other cities, per CNN.
Starbucks CEO Brian Niccol, the former head of Chipotle, said the store closures in major metro areas will help the company refocus on its goal of serving as a “third place” between home and work for its consumers.
Starbucks plans to open and remodel existing locations in major cities
“We will end the fiscal year with nearly 18,300 total Starbucks locations — company-operated and licensed — across the U.S. and Canada. In fiscal year 2026, we’ll grow the number of coffeehouses we operate as we continue to invest in our business. Over the next 12 months, we also plan to uplift more than 1,000 locations to introduce greater texture, warmth, and layered design,” Niccol said in a news release back in September.
The company had “closed locations that were underperforming or unable to meet our brand standards” in those regions and plans to open and remodel other stores in New York City and Los Angeles in 2026, “featuring refreshed designs and elevated experiences that reflect the Starbucks brand,” a Starbucks spokesperson confirmed to CNN via email.
In New York City alone, Starbucks faced increased competition from smaller, independent coffee shops, as well as other beverage chains that sell smoothies, bubble teas and other options, according to CNN.
The company plans to win back customers through its latest strategy by renovating over 1,000 stores, which is 10% of its U.S. company-owned locations, with chairs, couches, tables and power outlets over the next year.