Starbucks to close 150 locations

SEATTLE – Starbucks expects to close at least 150 stores by the end of 2019. The announcement, released via a notice to investors late Tuesday afternoon did not specify which locations will close, only that the closures will affect "underperforming company-operated stores in its most densely penetrated markets."

Historically Starbucks averages 50 closures per year, according to a company spokesman, but slowing growth has led the company to "optimize its U.S. store portfolio at a more rapid pace".

The company will instead shift new store growth to underpenetrated markets and slow the growth of licensed stores - those found in other retailers such as supermarkets and airports – as these tend to be less profitable than company-owned stores.

"Our recent performance does not reflect the potential of our exceptional brand and is not acceptable," Starbucks CEO Kevin Johnson said in a statement. "We must move faster to address the more rapidly changing preferences and needs of our customers."

With over 28,000 stores across all markets Starbucks is the 3rd largest fast-food chain in the world, behind Subway and McDonalds, but same-store sales have struggled in the past few years.

The company seeks to speed innovation in it is core coffee category whilst increasing its presence in the burgeoning tea market. (Ironically, the company only recently closed the Teavana tea chain and dropped the Tazo tea brand – decisions that may now be revisited).

The company’s notice to investors revised their quarterly earnings forecast downward to 1% from an initial 3%. That news sent company stocks tumbling 3.5% in after-hours trading.

Starbucks currently operates 42 stores in the metropolitan Oklahoma City area.

(image courtesy Michelle Gustafson / Bloomberg)