Starbucks Shrinks to Grow Again
Starbucks built its empire on ubiquity?the idea that wherever you turned, a latte was never far away. Its rapid expansion became so extreme that even The Onion once spoofed the chain?s strategy with the headline, ?New Starbucks Opens in Rest Room of Existing Starbucks.? The humor landed because it wasn?t far from the truth. For years, saturation defined the company?s growth playbook. But that approach has begun to show serious cracks.
According to S&P Global Market Intelligence, the coffee giant?s financial performance tells the story of a company hitting the limits of its own success. After posting a gross profit of $3.385 billion and net income of $3.282 billion in fiscal year 2022, Starbucks surged in 2023 to $9.869 billion in gross profit and $4.125 billion in net income. Then the slide began?gross profit dipped to $9.732 billion in 2024 and $8.570 billion in 2025, while net income fell to $3.761 billion and then $1.856 billion.
The company has acknowledged that its strategy of relentless expansion created new challenges. Too many stores began cannibalizing one another?s sales, and brand fatigue started to set in. ?Our financial results were very disappointing, and it is clear we need to fundamentally change our strategy to win back customers and return to growth,? Chairman and then Chief Operating Officer, now CEO, Brian Niccol said during Starbucks? Oct. 30, 2024, earnings call, according to CNN.
In its 2025 annual report, Starbucks said it launched a ?Back to Starbucks? campaign aimed at restoring customer loyalty, improving the in-store experience, and increasing efficiency. That reset required tough choices. The company closed 627 stores during its 2025 fiscal year and set aside $892 million for restructuring, covering store asset impairments, employee separation costs, and lease write-downs.
The New York City think tank Center for an Urban Future noted that Starbucks had ?led the way? in cutting back by closing 42 stores in the city since December 2024. According to CNN, the company also shuttered 20 locations in Los Angeles, 15 in Chicago, seven in San Francisco, six in Minneapolis, five in Baltimore, and ?dozens more? nationwide.
As competition from boutique cafes, small chains, and trendier beverage options continues to grow, Starbucks has been experimenting with leaner store formats. In 2024, the company introduced a coffee-to-go model, where customers pick up their orders via walk-up windows or drive-thrus?an attempt to reclaim efficiency and adjust to evolving consumer preferences.
Source: GlobeSt/ALM