Why is Starbucks closing stores and cutting staff worldwide?

1 min read

At first glance, the reasons seem familiar:
- Declining sales: US revenue - the company’s core market - is on course for its sixth consecutive quarterly drop, with shares already down more than 8% this year.
- Intensifying competition: Drive-through challengers are winning on speed and convenience.
- Rising costs: Coffee prices continue their relentless climb.

Yet beneath the surface lies a deeper issue: brand erosion.
Too many stores no longer deliver the distinctive experience that once justified the premium price. Purpose statements have shifted without conviction, reputational scores have faltered on transparency and employee welfare, and the brand’s cultural relevance has begun to slip.

Enter Brian Niccol, the new CEO, with a $1 billion ‘Back to Starbucks’ transformation plan. His strategy includes strengthening the brand, closing underperforming outlets, redesigning store layouts, reimagining seating, deploying technology such as AI-driven inventory systems, an AI barista assistant, and a queuing algorithm...among others.

The matter is undoubtedly complex and multilayered. But we can take an obvious lesson from this.
Customers line up for the coffee and line up for the brand. Strip away the brand, and Starbucks becomes just another coffee shop with Wi-Fi.