Why did Starbucks close 7 of its stores in downtown San Francisco last month?

Starbucks recently announced aggressive expansion plans by 2030 intending to reach 55,000 locations globally. However, the company is also closing stores in the meantime like those in San Francisco, just one of the latest companies to do so in the city which has seen a rash of closures.

In October, Starbucks announced the “tough decision” that it would shutter seven of its locations in the Golden Gate City to ensure “a healthy store portfolio” according to an internal letter to workers from regional vice president for Northern California Jessica Borton. As part of that endeavor she said that the company will be investing $2.5 million in four other shops in San Francisco.

Why did Starbucks close seven of its stores in downtown San Francisco last month?

The closures were carried out on 22 October but there are still 52 remaining Starbucks locations in the city. All seven of the stores that were shuttered are located in the Cathedral Hill, Financial District, SoMa and Union Square neighborhoods according to reporting in the San Francisco Business Times. The media outlet said that no employees would lose their jobs as they were offered hours at other stores.

Starbucks is not alone in closing stores in San Francisco this year. The city has seen a rash of closures including by Office Depot, Gap-owned brands like Old Navy, Banana Republic, and Athleta, as well as Nordstrom closing its flagship store in August just to name a few.

Nordstrom’s CEO Jamie Nordstrom, said in a statement: “The dynamics of the downtown San Francisco market have changed dramatically over the past several years, impacting customer foot traffic to our stores and our ability to operate successfully.”

The heart of city is still struggling to get occupancy of office spaces back to pre-pandemic levels. San Francisco is not alone as the Bay Area’s three major cities are reporting downtown office vacancy levels around 30 percent according to CBRE, a commercial real estate company.

On top of that, like in other cities across the nation, employees are resisting returning to the office, preferring to do their work remotely from home. Those that are being forced back into the office have even created a new work trend called “coffee badging.”

This could explain why Starbucks, like other coffee house chains, are prioritizing to-go options for downtown operations in San Francisco. In order to conform with mandatory attendance quotas, employees pop into the office briefly to make their presence known before skipping out again to work from their preferred location.