Fact Check Analysis: Why Starbucks is closing hundreds of stores

Introduction

This article examining Starbucks’ decision to close hundreds of stores has prompted questions about the motivation behind significant investments mandated for non-company-owned locations. Specifically, readers want to understand whether the new CEO’s directives apply equally to franchisees and why non-corporate store operators would commit to capital expenditures for these changes. DBUNK is here to untangle the facts behind these high-stakes business decisions and clarify what’s really happening at Starbucks.

Historical Context

Starbucks has been an undeniable force in American coffee culture since the 1990s, with its rapid expansion sparking both admiration and parody. Known for its ubiquity, the company has grown to over 32,000 locations worldwide. Yet, shifts in consumer behavior, especially after the COVID-19 pandemic—with more people working from home and seeking alternatives—have challenged Starbucks’ dominance. The increased popularity of independent coffee shops and innovative drive-thru chains, as well as inflation, have all pressured Starbucks to rethink its strategies and store footprint.

Fact-Check: Specific Claims

Claim #1: “Starbucks announced Thursday that it will close 1% of its stores in North America this month … as part of a $1 billion restructuring plan.”

This statement refers to the closure of approximately 400 stores out of over 32,000 global locations. Starbucks has publicly confirmed plans to shut underperforming stores in North America as part of a broader restructuring initiative, with financial filings and executive statements aligning with the scale and motivations presented. The mentioned figure—1% of all stores—corresponds to Starbucks’ most recent reported store counts. Comparable restructuring and location rationalization efforts have occurred in past years, especially in urban markets with declining traffic. This claim is substantiated by company earnings reports and independent business analysis.

Claim #2: “The chain is also trying to win back customers by renovating 1,000 stores — 10% of its company-owned US locations — with chairs, couches, tables and power outlets over the next year. Starbucks aims to make changes to all of its US stores within the next three years.”

The article states that Starbucks will renovate 1,000 stores, representing about 10% of company-owned U.S. locations. According to Starbucks’ 2024 SEC filings and statements from company leadership, these remodels are indeed targeted at company-owned stores—not licensed or franchised locations. Licensors (the 90% non-company-owned stores referenced in the user’s query) operate under separate agreements and typically bear the cost of mandated upgrades—but such mandates must be contractually stipulated. Starbucks has not announced a requirement for licensed store operators to undertake costly upgrades in this turnaround phase. Major financial news outlets and Starbucks’ own press releases make clear these initial renovations focus on stores directly controlled and financed by Starbucks, not independently operated ones.

Claim #3: User Question – “Why would the 90% of non-company owned stores invest capital into their store for the changes that current CEO Niccol has mandated?”

This is a critical point raised by readers seeking clarification on the impact of corporate mandates on licensed stores. Starbucks’ U.S. footprint consists of both company-owned and licensed locations, with licensed stores making up the majority. Under standard practice, Starbucks can recommend—but not unilaterally require—capital upgrades at licensed locations unless their contracts specify otherwise. In the current turnaround, Starbucks’ disclosed plans and analyst commentary indicate that the extensive renovations and new in-store experiences referenced by the CEO are focused on company-owned stores. Licensed store owners may opt in to corporate-led changes, but are not typically obligated to fund capital improvements unless they are a contractual requirement. Therefore, there is insufficient evidence that 90% of non-company-owned stores must invest in capital upgrades as part of the latest CEO-mandated initiatives.

Claim #4: “Starbucks’ turnaround has been made more challenging by ongoing macroeconomic uncertainty and the rapid expansion of drive-thru focused competitors.”

The article’s assertion that Starbucks faces competitive and economic headwinds is firmly supported by third-party retail studies and market analyses. Independent coffee concepts and fast-growing drive-thru chains like Dutch Bros and Blank Street are indeed siphoning traffic away from traditional urban Starbucks outlets, especially as consumers adjust post-pandemic routines. Inflation and a preference for value have led some consumers to cut back on discretionary coffee purchases. Recent industry surveys and Starbucks’ own quarterly earnings acknowledge these challenges, adding validity to the claim.

Conclusion

The article provides a mostly accurate summary of Starbucks’ current business challenges and restructuring efforts. Its reporting on store closures and the rationale for selective renovations generally aligns with publicly available financial and industry data, and the essential distinction between company-owned and licensed stores is reported with sufficient clarity. However, the article could more explicitly clarify that most of the mandated investments and operational changes apply to company-owned stores rather than licensed or franchise-operated locations. This context is crucial for understanding the real impact of the CEO’s initiatives, particularly for non-corporate store owners, and helps address the user’s primary concern. Overall, the article’s factual statements are supported, but would benefit from clearer differentiation regarding which stores are affected by renovation and investment requirements.