Hundreds of stores are closing in Europe and the U.S., yet Starbucks’ revenue in China is growing—so who’s still drinking Starbucks?

Starbucks is in trouble: yesterday it announced a massive $1 billion restructuring plan, including closing hundreds of stores across the U.S., Canada, and Europe—and laying off approximately 900 employees. Interestingly, Starbucks’ revenue in China is rising: in Q3 it reached $790 million, up 8% year-on-year; its total store count in China has grown to 7,828—adding 70 new stores in just one quarter—and it has entered 17 county-level markets for the first time. Why is the company contracting in Europe and North America while expanding in China? Are Western consumers abandoning Starbucks—while Chinese consumers are drinking more of it than ever? This isn’t Starbucks’ first round of cost-cutting and efficiency drives. Back in February, Starbucks cut 1,100 jobs globally. This latest store-closure initiative is moving extremely fast—launched immediately upon announcement. Although Starbucks hasn’t disclosed the exact number of closures, it stated that by the end of this month—the close of its fiscal year—its North American store count will stand at 18,300. As of late June, Starbucks operated 18,734 stores in North America. That means over 400 stores will shut down across North America alone. Of the $1 billion investment, $850 million will go toward physical store closures and terminating lease agreements. Rather than keep paying rent and wages, Starbucks is opting to pay breach-of-contract penalties—a stark illustration of choosing short-term pain over long-term suffering. So what’s happening to Starbucks? Have Western consumers really lost their taste for it? In fact, Starbucks’ sales in the U.S. have declined for six consecutive quarters. Meanwhile, the market is flooded with specialty coffee shops and fast-food brands offering cheaper, high-quality coffee. Compared to them, Starbucks remains relatively expensive. Western consumers, too, understand the principle of “spend where it matters, save where you can”—and they’re no longer willing to pay premium prices for lattes. A $2–$3 cup from Dunkin’ or McCafé tastes just as good. If Starbucks is struggling in Europe and the U.S., logic suggests it should face even steeper challenges in China—where competitors are fierce: Luckin Coffee, Cotti Coffee, and even Missevan Ice City (a bubble tea giant) have all entered the coffee space, offering $2–$3 cups of coffee as standard. A Starbucks drink, by contrast, costs at least $20—yet its revenue is still climbing. In Q3 of fiscal year 2025, Starbucks’ China revenue hit $790 million, up 8% year-on-year. Its store count in China has reached 7,828—including new outlets in 17 county-level cities. This seems counterintuitive. What exactly has Starbucks done to achieve such growth—despite its high prices and intense competition? Over the past two years, Starbucks has quietly accelerated its expansion into lower-tier cities and county-level markets. In fiscal year 2024, it opened a record 790 new stores; expansion continued in FY2025, and by Q3, its nationwide store count had reached 7,828—covering over 1,000 county-level markets. For residents of these counties, Starbucks is still a novelty—so when it finally opens in their neighborhood, people naturally want to try it. And let’s be frank: for many, drinking Starbucks carries social cachet—it signals an aspirational, “bourgeois” lifestyle. Those who get it, get it. Moreover, under mounting competitive pressure, Starbucks has proactively adjusted its strategy. First, it launched its “True Taste, Zero Sugar” beverage system, offering over 500 combinations of sweetness levels and flavor profiles—catering to consumers’ growing demand for health-conscious and personalized options.

Starbucks is carrying out major layoffs across North America—so why has China become the ‘exception’?

Data shows that in Q2 of fiscal year 2026, Starbucks posted net revenue of $9.5 billion, up 8.4% year-on-year; operating profit reached $828 million, surging 38% year-on-year; and global same-store sales rose 6.2%—all exceeding analyst expectations. Revenue, profit, and same-store sales are all rebounding simultaneously—indicating that CEO Laxman Narasimhan’s restructuring efforts are already delivering financial results. Following the earnings release, Starbucks’ stock surged over 5% after hours. The capital markets voted with real money. Yet, on the other side of the Pacific, China is playing out an entirely different script. After Boyu Capital’s Takeover, Starbucks China Has Gotten ‘Lighter’ While North America is cutting openly, China is rolling out an ambitious expansion blueprint. In November 2025, Boyu Capital acquired a 60% stake in Starbucks China for $4 billion. By April this year, the joint venture between Starbucks and Boyu Capital was officially established—operating roughly 8,000 stores. From day one, the new company unveiled an ambitious goal: expand Starbucks’ store count in China to 20,000—and implement its “One Store, One Face” initiative. Judged solely by these moves, Starbucks China and North America appear to inhabit two different seasons: one sketching a 20,000-store vision, the other slashing 2,000 jobs in a single year—with three rounds of layoffs so far, none affecting China. No layoffs, no store closures—China looks like an ‘exception.’ But exceptions are often just conventional operations not yet visible to outsiders. Beneath the calm surface, another transformation is unfolding silently. First, the capital structure is changing. After the joint venture’s formation, Boyu holds dominant board seats; major decisions regarding China’s business no longer require层层 approval from Seattle headquarters—the reporting line has shifted from Starbucks Global to the joint venture’s board. Starbucks’ store formats in China are also being reshaped. Under “One Store, One Face,” Starbucks China’s store models now stretch across unprecedented elasticity: stores can be as compact as a single service counter—or as expansive as its 800+ Reserve and themed stores. Starbucks China has abandoned its rigid global template and begun adopting the flexible, context-driven approach of rivals like Luckin and Cotti—fitting stores wherever viable, regardless of setting. As Liu Wenjuan, CEO of Starbucks China, put it: “Starbucks China’s future store growth will come partly from lower-tier markets—and partly from deeper penetration into more granular scenarios within Tier-1 and Tier-2 cities.” Concurrently, store-level autonomy is expanding. Baristas’ self-created signature drinks may now appear on digital menus—and even background music can be customized by staff based on local community characteristics. Next, the transformation reaches deeper—into the realm of ‘people.’ For Starbucks employees, the first noticeable change is increased workload. According to a financial magazine report, at a typical Starbucks store serving ~260 customers per day, full-time staff were reduced from five to four—and shift sizes shrank from six to eight people down to just two or three. One employee must now handle ordering, heating, brewing, packaging—everything. In some newly opened stores over the past two years, staffing shortages have even made it difficult to fully staff the outlet. A January report by Jiemian News corroborates this: among 269 regions listed in Starbucks’ official job postings, 61.7% were recruiting student part-timers, 17.8% sought social part-timers, and only 20.4% offered full-time positions.

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