Starbucks Workers United denounced the coffee giant’s $1 billion restructuring plan that CEO Brian Niccol announced Thursday, condemning the closure of prominent union locations, including Seattle’s flagship Reserve Roastery, while Niccol earned $97.8 million in his first four months on the job.
The restructuring eliminates 900 corporate jobs and shuts hundreds of underperforming stores across North America, affecting about 1% of Starbucks’ (NASDAQ: SBUX) locations. Among the confirmed shutdowns are the Reserve Roastery, which unionized in 2022, and a union store in Chicago.
“It has never been more clear why baristas at Starbucks need the backing of a union,” the organization said in a statement. The group criticized the company for making shutdowns without barista input.
The timing brings attention to compensation disparities. Niccol’s pay package creates the largest CEO-to-worker gap of any S&P 500 company at 6,666 times more than the median Starbucks worker, who earned $14,674, according to an AFL-CIO report.
The union, which represents more than 12,000 baristas at stores that voted to unionize since 2021, says it will engage in “effects bargaining” for every impacted union location to help displaced workers transfer to other stores.
Workers at the Seattle Roastery picketed Monday over stalled contract negotiations before learning of the shutdown. Starbucks boarded up the $20 million flagship location, which opened in 2014, on Thursday with a farewell letter to the community.
“This announcement makes it clear things are only going backwards at Starbucks under Brian Niccol’s leadership,” the group said, demanding the company finalize a fair contract with union workers.
While Starbucks maintains that union status played no role in shutdown decisions, the closing of high-profile organized locations follows recent labor tensions, including a lawsuit that union workers filed over dress code reimbursement requirements.
The restructuring costs include approximately $150 million in employee separation expenses and $850 million related to store closures and lease exits. Affected employees will be notified Friday, with the company offering transfers where possible or severance packages.
Niccol said the shutdowns target locations “where we’re unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance.” This is his second wave of corporate cuts after he eliminated 1,100 positions in February.
The company has struggled with declining sales for six quarters running as consumers reduce spending on premium coffee amid economic pressures and increased competition.
Despite the shutdowns, Starbucks plans to resume expansion in fiscal 2026 and will renovate over 1,000 current stores to restore a cozier coffeehouse atmosphere. The company will end fiscal 2025 with approximately 18,300 North American locations.
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