For years, Starbucks has been committed to blanketing the streets and alleys of major US cities like New York and Los Angeles, becoming an ever-present fixture within easy reach. Today, this era of aggressive expansion has officially come to a close.

Starbucks' expansion once seemed limitless, even becoming the subject of public jokes. In 1998, the satirical newspaper The Onion ran a headline that read: "New Starbucks Opens In Restroom Of Existing Starbucks." A few years later, comedian Lewis Black quipped that he had ventured to the "ends of the earth" in Houston, only to find two Starbucks stores directly facing each other across the street.

However, Starbucks now finds itself in a difficult position. Its previous strategy of dense clustering in urban core areas to attract morning commuters has backfired, succumbing to the combined pressures of fierce market competition, the rise of remote work, and rising operational costs.

Last year, Starbucks recruited Brian Niccol from the Mexican fast-food chain Chipotle to serve as CEO, hoping he could steer the brand out of its troubles. Upon taking the helm, Niccol explicitly stated that the practice of allowing stores to operate "cheek by jowl" would no longer be permitted. As a key part of a $1 billion restructuring plan, Starbucks will close approximately 400 stores across the United States, with the majority concentrated in major metropolitan areas.

According to data from the Center for an Urban Future, a New York City think tank that tracks chain store openings and closures, Starbucks has shuttered 42 locations in New York City this year, accounting for 12% of its total stores in the city. Consequently, it lost its crown as Manhattan's largest coffee chain to Dunkin' Donuts.

Other reports indicate that Starbucks has closed over 20 stores in Los Angeles this year, 15 in Chicago, 7 in San Francisco, 6 in Minneapolis, 5 in Baltimore, and dozens more in other cities.

Niccol is attempting to reposition the Starbucks brand, steering it back to its core value of being a "third place"—a relaxing social environment situated between home and the office.

A Starbucks spokesperson stated in an email that the company conducted a comprehensive review of its more than 18,000 stores in the US and Canada, ultimately "closing underperforming stores or those that no longer meet the brand's standards." Starbucks plans to open a new wave of stores in 2026 and renovate some existing ones, including in key metropolitan areas like New York and Los Angeles, aiming to "reimagine the Starbucks experience through refreshed design and elevated service."

To some extent, Starbucks' current predicament stems from the very business model it pioneered.

Before Starbucks rose to prominence, it was difficult to imagine people spending over two dollars on a cup of coffee, let alone having any concept of lattes and other specialty drinks.

But times have changed. Part of the reason Starbucks is now closing urban stores is that it is losing market share to a proliferating number of competitors—from niche boutique cafes to smaller chains like Gregorys Coffee and Joe & the Juice, not to mention successive waves of new smoothie and bubble tea shops.

Arthur Rubinfeld, who partnered with former Starbucks CEO Howard Schultz on store location and design strategy in the 1990s and again from 2008 to 2016, and now runs a consumer brand consultancy called Airvision, noted, "Competition in the coffee market in US urban areas has intensified significantly. The emergence of numerous new coffee shops is steadily eroding foot traffic at Starbucks locations."

Rubinfeld added that with Starbucks' sales growth stagnating in recent years, closing an underperforming store can actually boost performance at nearby stores that are "larger, better equipped, and capable of serving loyal customers."

Analysts suggest that Starbucks, which originated in Seattle's trendy neighborhoods half a century ago, now sees greater potential for growth and profitability in suburban areas as urban markets become saturated. The company is increasing its footprint with drive-thru locations in the suburbs, where labor, rent, and other operational costs are significantly lower than in major US urban cores.

Beyond market competition, other multiple pressures are forcing Starbucks to close city stores.

Following the COVID-19 pandemic in 2020, major cities like New York, Chicago, Los Angeles, and San Francisco experienced population outflows, shrinking their market size. Although this trend began to reverse starting in 2023, the effects persist.

Catherine Yeh, Market Analytics Director at real estate data analytics firm CoStar Group, pointed out that the rise of remote work has dealt a permanent blow to many Starbucks locations in central business districts. These stores previously relied heavily on daily commuter traffic. As a result, Starbucks has closed stores located in the ground floors of numerous office buildings in downtown Los Angeles.

Furthermore, Starbucks has grown weary of serving as the de facto public restroom in many American cities.

In 2022, former CEO Howard Schultz publicly stated, "The mental health crisis in America is escalating. Many people treat our stores as public restrooms, which poses significant safety challenges for store operations."

This year, Starbucks formally rescinded its policy of allowing people to sit in stores or use restrooms without making a purchase. The company has also posted notices outside stores explicitly prohibiting activities such as panhandling, drinking alcohol, and vaping.

This large-scale closure of stores is one of the measures Niccol is taking to address Starbucks' recent sales decline, strategic missteps, and executive-level turmoil.

To win back customers who are willing to sit down and enjoy their coffee in-store, Starbucks plans to renovate 1,000 of its stores over the next year—accounting for 10% of its company-operated stores in the US. Renovated stores will feature added seating, sofas, tables, and power outlets.

However, the pace of this transformation led by Niccol has not met the expectations of some investors. So far this year, Starbucks' stock price has fallen by approximately 6%.

Sharon Zackfia, an analyst at William Blair, suggested that store renovations might aid Starbucks' transformation, but for the company, the greater challenge lies in improving store operational efficiency.

Starbucks stores need to cater to two distinct types of customer groups simultaneously: commuters who want to grab-and-go, and leisure customers who wish to sit and stay awhile. Striking the right balance between these two groups remains a difficult challenge that Starbucks is still grappling with.

Zackfia candidly admitted, "This isn't an easy problem to solve. Starbucks' path to transformation is proving more challenging than many anticipated."