Smell The Coffee As Customers Cut Back On Discretionary Spending

26th September 2025

Starbucks has announced it will lay off about 900 non-retail (corporate / support) employees in North America.

Earlier in 2025 Starbucks also cut 1,100 corporate roles under a different restructuring move.

Starbucks is closing underperforming stores — in North America and some in Europe (including UK, Austria, Switzerland) — as part of a “portfolio review” of its company-operated locations.

In the U.S. and Canada, it expects the net count of Starbucks stores to fall by about 1 % by the end of fiscal 2025.

In the UK (and wider EMEA), Starbucks has confirmed that it is consulting over closures of some “company-owned” UK stores, though it hasn’t specified how many.

In the UK, Starbucks is consulting on closing some of its company-owned stores as part of its global “portfolio review.”

Starbucks operates around 520 company-owned stores in the UK.

The company has begun a consultation process over closures of some of those UK locations.

It has not publicly disclosed how many UK stores will be closed or which ones.

The closures in the UK are part of a broader EMEA (Europe, Middle East, Africa) review, alongside store openings in the UK (about 80 planned for this fiscal year).

There is good evidence that the cost-of-living crisis is one of the key factors behind Starbucks’ UK struggles, including dropping sales, reduced profits, and the need to rethink stores and staffing.

Falling revenue and profits in the UK

Starbucks UK reported a pre-tax loss of about £35.2 million for the year ending September 2024, down from a profit of £16.9 million in the previous year.

Revenues dropped around 4% year-on-year to roughly £525.6 million over that period.

Consumers are spending less on discretionary items

The reports say that “softer consumer spending” is one of the reasons cited by Starbucks for the decline.

UK households under inflation and rising prices are cutting back on non-essentials (“eating and drinking out”, “coffee and drink subscriptions”, etc.).

Inflation and high input / overhead costs

The cost of things Starbucks uses (milk, coffee beans, wages) is higher, squeezing profit margins.

General inflation (including food & drink inflation) remains elevated, which reduces how much discretionary spending people can afford.

Some customers are choosing cheaper alternatives, visiting less, or cutting back on “luxury” purchases. There are reports of people skipping daily coffee out, lowering frequency, or going to less expensive cafés.

Long queues, more complex menus and rising wait times have also been cited as factors that make Starbucks less attractive when people are more price sensitive.

Declining consumer spending due to cost of living, inflation, and squeezed disposable incomes is a significant factor in why Starbucks is closing stores, laying off staff, and seeing weaker sales in the UK.