Starbucks suddenly shuts down many NYC stores in a ‘disordered’ reduction.

Starbucks to Close Dozens of Stores in New York City

Starbucks recently revealed its unexpected decision to shut down numerous locations in New York City, targeting several well-known spots.

The Seattle-based coffee chain laid off 900 corporate employees as part of a $1 billion restructuring plan last week and has since closed over 400 stores across the country, following its sixth consecutive quarter of declining sales.

According to the New York City Department of Consumer and Workers’ Protection, this move affects 54 coffee shops in five different city wards. Notably, some of these closures include significant locations in the Upper East Side and Greenwich Village, as detailed in spreadsheets shared with the media this week.

Other areas impacted include the Upper West Side, the Financial District, and Midtown Manhattan, with specific locations like 156 W. 52nd and 871 8th Ave. being mentioned.

Landlords have expressed surprise at this approach, describing it as chaotic and unexpected.

“They literally put signs on the windows overnight without notifying the landowners or building managers,” said Jeffrey Roseman, a vice-president at Newmark. “I had no warnings or heads up.”

Typically, retail tenants engage with landlords to negotiate potential rent adjustments, but in this instance, there was no such outreach, which is fairly uncommon.

Historically, major retail chains like Starbucks have prides themselves on having a presence on nearly every block in the US and Canada, according to Roseman.

A spokesperson for Starbucks did not provide immediate comments on the situation.

Starbucks CEO Brian Nicole mentioned on September 25th, “We have identified coffee houses that cannot provide the physical environment our customers and partners expect.” He previously led a year-long turnaround for the company after his tenure at Chipotle.

In addition to closures, Starbucks has also identified locations where they foresee no financial improvement.

However, the company may be in violation of local labor laws, as noted in a warning letter from the city sent on Tuesday. Employees at the closed stores are entitled to opportunities in other locations within the same ward under the Fair Operating Income Act.

“Starbucks appears to be on track to violate its legal obligations to employees at its New York City locations,” stated Vilda Vera Mayuga from the Consumer and Workers Protection Department.

Mayuga further elaborated that employees let go will have priority for jobs near their former locations. Starbucks has until Friday to clarify how it will adhere to labor laws in New York City.

The coffee giant is facing significant challenges, including increasing competition from fast-food chains like McDonald’s, which are exploring new drink options in 500 locations across Wisconsin and Colorado.

Additionally, the aggressive labor campaign led by Starbucks United has resulted in 650 stores unionizing, with 59 stores now marked for possible closure, according to the labor group.

Increased costs of coffee under new customs regulations also contribute to the struggles. “Companies are grappling with sales trends and other pressing factors,” noted analyst Mark Karinowski.