There was a time when you couldn’t walk two blocks in Manhattan without bumping into a Starbucks. Comedians even made entire routines about it, with Lewis Black once joking that he’d found the “end of the universe” in Houston: a Starbucks staring at another Starbucks right across the street.
Now it looks like that era is over.
Starbucks has closed around 400 stores nationwide, almost all of them in big cities, according to a company spokesperson. It’s part of CEO Brian Niccol’s $1 billion restructuring effort, and the damage is visible if you know where to look.
New York got hit hardest. The company shut down 42 locations there, 12% of what they had in the city. In Los Angeles, more than 20 stores closed, with Chicago losing 15, and San Francisco, 7. The list goes on: Minneapolis, Baltimore, and plenty of other metros saw multiple closures.
What went wrong?
The company spent the ’90s and 2000s blanketing cities with locations. The strategy was simple: be everywhere. Catch people on their morning commute, during lunch breaks, and after work. Make it impossible to avoid buying a latte.
It worked brilliantly until this very strategy created the problem.
First, all the burgeoning stores created a market for premium coffee that other businesses happily filled. Independent cafes began to pop up, and smaller chains like Gregory’s and Joe’s Coffee moved in. Bubble tea shops exploded, and smoothie bars carved out their own corners. Suddenly, Starbucks wasn’t special anymore; it became just another option, often the most corporate and least interesting one.
Then came the pandemic. Remote work absolutely gutted Starbucks’ business model in downtown areas. All those office workers who grabbed coffee on their way to work? They stopped showing up. Many still haven’t come back.
Cities like New York, LA, Chicago, and San Francisco lost population after 2020. They’ve gained some residents back since 2023, but the five-day office routine isn’t returning. Catherine Yeh from CoStar Group noted that Starbucks closed several locations on the ground floors of downtown LA office buildings, specifically because the foot traffic disappeared.
The bathroom situation
There’s also an uncomfortable reality nobody really wants to discuss: Starbucks becoming America’s public restroom by default.
Schultz didn’t mince words when he made a statement regarding the situation back in 2022: “The mental health crisis in the country is severe. There is an issue of safety in our stores, in terms of people coming in who use our stores as a public restroom.”
So it didn’t come as a surprise when Starbucks ended its open-door policy this year. They put up signs outside stores banning panhandling, drinking alcohol, and vaping. You now need to buy something to hang out or use the facilities. It’s a far cry from the “third place” concept they built their brand on.
What comes next?
Starbucks seems to be putting its hopes on the suburbs now. This would translate to more drive-throughs, lower operating costs, and fewer headaches. Meaning, the romance of being the hip Seattle coffee brand will soon be gone. Now it’s all about finding markets that actually make the coffee chain big bucks.
The company says it’ll open new stores and renovate existing ones in 2026, including in New York and LA. They’re planning to remodel 1,000 locations—about 10% of U.S. stores—with chairs, couches, tables, and outlets. Trying to recreate that coffeehouse vibe people actually want to spend time in.
But Sharon Zackfia, an analyst at William Blair, isn’t convinced the turnaround will be easy. Starbucks is serving two totally different types of customers—people who want to grab their drink and leave, and people who want to camp out for hours—in the same physical space. “It’s not an easy thing to fix,” she said. “It’s been a tougher slog than many expected.”
The stock market seems to agree. Starbucks shares have dropped around 6% this year.
The takeaway
Starbucks isn’t going anywhere, but the version of Starbucks that dominated every urban block is finished. The company reviewed all 18,000-plus stores in the U.S. and Canada and axed the ones that “were underperforming or unable to meet our brand standards,” per a spokesperson.
Fewer stores, better locations, more suburban focus. That’s the plan going forward.
Whether it works depends on whether customers still care. Because at this point, there’s a decent indie coffee shop—or a Dunkin’—probably closer to you anyway.
Sources: Starbucks, CNN, CoStar Group