Your neighborhood Starbucks (SBUX) might look bulletproof, especially if it survived ballooning rents, changing commutes, and years of customers ordering the same morning drink.
However, Starbucks is no longer looking at treating every existing café as untouchable.
The chain is becoming much more selective about where it spends money, even as it continues to see a lot more room for coffeehouses, CEO Brian Niccol said during the company’s Q3 earnings call.
Consequently, some locations are receiving warmer interiors, better seating, and operational upgrades. At the same time, others might face a tougher review as their management looks to rebuild their development pipeline, examining stores that aren’t delivering what Starbucks expects.
Starbucks still wants to grow, but it may have to shrink or shift in certain places first.
Starbucks resets its approach to store growth
Niccol argues that many Starbucks U.S. stores were built, sited, or remodeled under a development strategy that no longer meets the company’s standards.
He acknowledged that Starbucks “did not have a great development strategy” two or three years ago. Consequently, it resulted in a portfolio containing tough remodel projects and, in some cases, “the wrong store in the wrong place.”
“We’re having to clean that up and fix that up,” Niccol said. “The good news is, as the business responds, it becomes more clear where you have the true problem stores.”
Moreover, when sales are rising overall, it becomes easier to spot which individual stores are still struggling.
Niccol said Starbucks would identify potential closures based on several criteria. “It’s really about performance and location and sometimes where the actual asset is from a standpoint of remodeling versus us being better off just building a new store,” he explained.
And there are additional deciding factors, he noted.
Is this the right representation of Starbucks, and are these the economics that, frankly, Starbucks should earn?
The resulting strategy is more about portfolio repair instead of a broad retreat. Starbucks may close stores that underperform, sit in poor locations, or require extensive renovations, while continuing to believe the surrounding market could support the brand.
Niccol said the coffee chain is now looking to fix the problematic portfolio and then build a pipeline containing “the right stores” in “the right locations.”
That is likely to keep North American net growth modest through fiscal 2027, even as Starbucks prepares for stronger expansion in later years.
Starbucks Q3 earnings beat expectations
Starbucks posted stronger-than-expected results in Q3, with adjusted earnings of 85 cents a share, blowing past the 20-cent consensus, according to Seeking Alpha.
Revenue dropped 1.5% year over year to $9.32 billion, mostly reflecting the transition of its China business, but it still beat estimates by about $200 million.
Moreover, global comparable-store sales jumped 7.9%, above the 5.7% consensus forecast. Transactions rose 4.2%, while average ticket grew 3.5%.
U.S. comparable sales climbed 7.9%, backed by 4.2% transaction growth and a 3.6% increase in average ticket. At the same time, international comparable sales rose 5.7%.
On top of that, Starbucks raised its fiscal 2026 outlook, forecasting adjusted EPS of $2.55 to $2.65, above the $2.39 consensus, alongside global comparable-sales growth approaching 6%.
The company management also maintained plans for 600 to 650 net new coffeehouses globally and used China sales proceeds to repurchase roughly $1.3 billion of outstanding debt.
Starbucks’ store count reveals a more selective expansion plan
The latest store numbers back up the claim that Starbucks isn’t simply about opening as many coffeehouses as possible.
The chain wrapped up Q3 with 18,371 North American locations, down 2% from 18,734 a year earlier. Moreover, its company-operated business added 27 net stores during the quarter, but 41 net closures across licensed locations more than offset that growth.
The result was a net decline of 14 coffeehouses. Additionally, its U.S. footprint also fell 2% year over year to 16,933 stores.
For perspective, that’s a relatively small quarterly drop for a chain of Starbucks’ size.
Starbucks is still opening stores where management sees attractive demand while allowing weaker or less strategically valuable locations to disappear.
CFO Cathy Smith also warned of potentially more store closures in the U.S. “In North America, while overall performance has strengthened, we are gaining deeper visibility into some underperforming coffee houses, which could result in some closures.”
So although this isn’t a wholesale U.S. retreat from Starbucks, it’s clearly becoming much less willing to keep every existing location open.
Noteworthy Starbucks closures in 2026
- Seattle Center Armory, Seattle: The coffee chain closed the high-profile location in April as part of a five-store hometown pullback, according to MyNorthwest.
- Seattle Children’s Hospital, Seattle: The Ocean Building café closed, while the hospital’s River Building Starbucks remained open, MyNorthwest reported.
- University District, Seattle: Starbucks closed its University Way location in April, removing a store from the busy student neighborhood.
- First Hill, Seattle: The Madison Street café was among five Seattle locations that were closed, and four unionized locations were affected, based on local reporting.
- Metropolitan Park East, Seattle: Starbucks closed the Minor Avenue office-district store amid changing workplace and commuter patterns.
- Downtown San Jose, California: The First Street café closed permanently in April, leaving two Starbucks stores near downtown, KTVU reported.
- Auburn Town Center, California: Starbucks closed the Elm Avenue location in March after operating there since 1996, according to the Auburn Journal.
Sources: MyNorthwest/KIRO Newsradio, KTVU FOX 2, Auburn Journal
What does this mean for Starbucks fans?
For Starbucks customers, a local closure doesn’t really mean the business has effectively given up on their neighborhood.
CEO Niccol explicitly discussed the quality of an existing location in terms of the attractiveness of its broader trade area. So basically, a café could close operations because the building is outdated, expensive to remodel, or poorly suited to Starbucks’ operating model, even as the company still plans to serve the same local market.
“If the answers aren’t yes, then you know what? We’re being honest with ourselves and saying, “We’re going to address the problem now, and we’ll build the right Starbucks in that trade area,” Niccol said. “I think this is just good hygiene.”
Nonetheless, it points to short-term inconvenience for customers relying on a particular café during their commute.
So in some areas, we could see the nearest Starbucks closing without an immediate replacement. In others, it might eventually reappear nearby in a location with better access, stronger economics, or a format designed around drive-through, café, mobile pickup, and delivery demand.
Customers whose stores remain open might instead receive an “uplift.” Starbucks has been adding warmer interiors, better seating, and other improvements at far less cost than earlier remodels.
Niccol said the “uplifted” stores were producing transactions across dayparts and access points because customers “feel better” entering them, even when only collecting mobile orders.