Starbucks has shut down another café in San Francisco, marking a significant trend—over a dozen locations have closed in the past two years.
The store at 295 California Street, a staple in the downtown area for nearly 20 years, is set to close its doors this Friday, according to reports.
This latest closure brings the total to at least six Starbucks shut down in the city since September of last year, making it the fourth closure of 2023 alone, alongside seven closures from earlier this year.
Factors behind these closures include economic pressures, shifting consumer behavior, and a reassessment of Starbucks’ store strategy.
Rising labor costs present a significant challenge, especially in San Francisco, which has the highest wages in the nation.
In line with a new minimum wage law in California, fast-food workers will see wages increase from $16.50 an hour to $20 an hour starting in April 2024.
A recent survey indicated that this minimum wage growth could lead to job losses across the state, although a spokesperson for Governor Gavin Newsom disputed the findings, suggesting they lack oversight from the appropriate boards.
According to an investigation from UC Berkeley, the impacts of the new wage law may not be as negative as suggested.
San Francisco has seen a surge in retail closures, impacted by factors such as theft, high operational costs, and a slow recovery in downtown traffic.
Major retailers like Rolex, Macy’s, Walgreens, and Target have either closed stores or reduced their operations, often due to safety and theft concerns.
Despite efforts to combat these issues through new legislation, the ongoing closures reveal deeper challenges for San Francisco’s retail scene.
Sharon Zakfia, an analyst at William Blair, mentioned that Starbucks faces a tough economic landscape due to high labor costs and sluggish recovery in the city.
In some cases, closures resulted from expired leases, while others aimed to maintain what the company calls a “healthy store portfolio.” This situation has been further complicated by the slow post-pandemic recovery in office occupancy.
Starbucks has experienced its sixth consecutive quarter of declining sales at established locations, indicating ongoing issues with service speed that frustrate customers.
In San Francisco, the company is also shifting away from its pick-up-only strategy as CEO Brian Niccol criticized the lack of warmth in that model, planning a nationwide overhaul by 2026.
Many longtime customers interpret these closures as signs of overexpansion, noting that many major retailers, including drugstore chains, have closed numerous locations over the years.
Starbucks’ footprint in the city has been halved from 59 locations in October 2023 to about 35-37 by August 2025, demonstrating a stark reduction.
For many regulars like Mike, the closing of the California Street location feels more like a financially driven decision, given the economic landscape and shifting priorities toward independent shops.
Some customers believe that local shops could attract people away from Starbucks, while speculation surrounds potential plans for redevelopment of retail spaces by new building owners.
The future of Starbucks in San Francisco remains uncertain, with 37 stores still operating, but further closures could be on the horizon.
Niccol has stated the company is focusing on improving service by hiring more staff, but in a challenging market like San Francisco, even this strategy may have its limitations.
Requests for comment from Starbucks, the Mayor of San Francisco, and Governor Newsom’s office remain unaddressed.
