The decline of Starbucks

How is Starbucks doing these days? Well not good, according to some in the media:

• • Starbucks announces significant store closures and layoffs, CNN Business 
  • Starbucks to Cut Jobs, Close Stores and Take $1 Billion Hit in Revamp Effort, The New York Times
  • Can it turn itself around, wonders The Economist?
  • The Harvard Business Review on how Starbucks devalued their own brand. (Never a good sign when HBR makes you a case study like this.)

And what should you expect in the first quarter of 2026? Key quote:

“Starbucks’ stock has lagged the broader market over the past year, driven by operational, financial, and sentiment-related factors, with the company’s share price declining roughly 10–14% while major indices posted gains. Key factors include persistent labor unrest and historic employee strikes, which have represented the longest and most widespread work stoppages in Starbucks’ history and raised investor concerns about operational disruption, rising wage and scheduling costs, and reputational risks that could depress sales and margins.

At the same time, Starbucks has faced slowing comparable store sales and transaction declines, higher labor and commodity costs, and the financial impact of restructuring initiatives, including store closures and layoffs, under its ‘Back to Starbucks’ turnaround plan, which have weighed on profitability and near-term earnings expectations.”

I thought Starbucks would turn it around as the pandemic declined and companies demanded RTO (return to office). Clearly they have more problems than I thought. It will be interesting to keep an eye on them over the next year.

As for me, I never forgave* them for abandoning so many neighbourhoods like mine during the pandemic, and then returning not as a Third Place but as a Grab n Go place. I now take my money to other coffee shops that did not do that. I suspect many others do too.

(*Forgave is too strong a word, but I said to myself when they closed my locals that I would remember that after the pandemic. By the way, the image above is of one of the Starbucks in my area.)