Like many restaurant chains, Starbucks closed a number of stores coming out of the pandemic, deciding to use the event to rethink its coffee shops.
The company closed hundreds of shops, particularly in urban markets, ostensibly to pave the way for a shift toward takeout, notably with drive-thru-focused locations in some markets and to-go stores in urban areas.
Since then, the Seattle-based coffee-shop giant has put its unit growth in another gear. It has opened an average of 400 company-operated locations in North America every year since then, including this year. Add in licensed stores, and the company has averaged 477 openings annually.
From 2016 to 2020 it opened 272 locations a year. After 2021 that increased to 398 per year. Before the pandemic, Starbucks grew company-operated unit count at a rate of about 3% per year. Since then, that rate increased to 4% or more, including 5% in 2023.
In each of the past two years, Starbucks has opened more absolute locations than any other restaurant chain in the U.S.
All that is ending, at least temporarily, with the news of the chain’s recent round of closures. Starbucks has been vague about the actual number, saying only that it will account for a 1% reduction compared with a year ago, finishing with 18,300 North American locations.
Starbucks has opened 300 locations since September last year. It finished last quarter with 18,734 locations, including 11,453 company-operated locations. That puts the number of closures at 434, depending on how specific CEO Brian Niccol was being when he provided that 18,300 number.
Those closures include 59 unionized locations, a Starbucks Reserve location in Seattle and other shops.
Starbucks’ aggressive unit growth coming out of the pandemic was understandable given its sales. The chain’s same-store sales had increased for 12 straight quarters before it unexpectedly turned south late in 2023.
The company appeared to be getting real traction with customizable cold beverages that its customers were boasting about on social media. When you have that kind of demand, it makes sense to increase supply.
At the same time, it’s fair to wonder whether Starbucks’ aggressive turn when it comes to unit growth was the right strategy.
Few major U.S. restaurant chains have undergone the kind of turmoil Starbucks has gone through the past few years.
There was the unionization effort, the return of Howard Schultz, a transformation strategy and executive overhaul, the hiring of Laxman Narasimhan, another transformation strategy, various social media boycotts, a sales decline, the firing of Narasimhan, the hiring of Brian Niccol, another management overhaul and, you guessed it, another transformation strategy. In addition to all this the company has now laid off some 2,000 workers.
Throughout all this, the company grew location count at a historically high rate. We might have wondered whether an earlier growth slowdown was a better strategy given how much change was taking place in Seattle.