Why Is Starbucks Cutting Stores Worldwide While Japan Is “Exceptionally Growing”? — The Real Background and Practical Advice for Future Café Entrants

Introduction (Key Takeaways)

• Global “selection and focus” is underway. In 2025, Starbucks announced closures of underperforming stores mainly in North America and a redesign, entering a “thinning out” mode with a temporary net decrease of about 1% in total store count (openings minus closures). Behind this are slower U.S. traffic, price fatigue at the high end, and delayed recovery in China.
• Japan is the exception—still expanding. As of end-March 2025 there were 2,011 stores, and the company profile states 2,077 stores, indicating steady openings. Local/seasonal products and tea-focused formats show that localization is working. While urban prices have been adjusted with location-linked pricing, demand for the brand experience remains strong.
• For entrepreneurs entering the café market now, the key is to avoid competing on the same playing field as the giants. Build an edge on Speed / Specialization / Story / Digital, start small and iterate fast. This article includes a sample P/L, typical initial investment, and alternative models (kiosk / mobile / subscription / RTD).

Who Will Find This Especially Useful (Concrete Personas)

• Individuals and small businesses opening a café: Those who want to keep initial investment low and compete on a different playing field.
• Operators considering a second concept: Those seeking to use midday idle hours and grow takeout/delivery.
• Developers / property managers: To attract “experience-rich cafés” to tenant mixes.
• Investors / lenders: To understand the unit economics and credit perspective for small cafés.

1. Start With Facts — Why Are “Stores Being Reduced”?

1-1. A Temporary “Thin-Out” in North America

In September 2025, Starbucks announced closures of underperforming stores mainly in North America, job cuts of about 900 in non-retail functions, and about $1B in restructuring. The company said that openings will also occur during the period, so the net change is about a 1% decrease. This is not an “exit,” but part of a redesign and portfolio optimization of stores.

1-2. The Current Demand Environment

Since 2024, persistent inflation in the U.S. has led to softness in high-ticket beverages and lower visit frequency. In China, recovery has been sluggish amid intensifying competition, and geopolitical factors in some regions (boycott effects in the Middle East) also weighed on performance, resulting in quarters where same-store sales were sluggish.

1-3. Not “Just Reducing,” But “Rebuilding”

Management has emphasized “shorter waits,” “warmer spaces,” and “leaner operations,” and is simultaneously advancing renovations / lift-ups for 1,000+ stores. In other words, the company is reducing and polishing at once.

In short—closing thin-margin sites and reinvesting in stronger sites and new formats is a textbook reallocation that restaurant chains commonly make at cyclical plateaus.

2. Why Japan Is “Exceptionally Growing”

2-1. Store Count Keeps Rising

With 2,011 stores as of end-March 2025 and 2,077 stated in the company profile, Japan’s network continues to expand. Local demand is resilient, and the concept of the “Third Place” is firmly established.

2-2. Localization (“Made-for-Japan” Crafting)

• Adapting to tea demand: Expansion of the “Starbucks Tea & Café” tea-focused format addresses Japan’s strong tea culture that pure coffee concepts may miss.
• Seasonal / regional storytelling: Sakura items and region-limited specials create compelling “limited experiences.” The visit driver is not just the beverage itself but a “seasonal ritual.”
• Blending with landscapes: Store designs that harmonize with cultural assets—like Kyoto townhouses—turn locations into tourist destinations for both domestic and inbound visitors.

2-3. Pricing Tuned to “Geography”

In 2025, Starbucks introduced location-linked pricing. Prices have been finely tuned in higher-cost urban sites to protect margins.

2-4. Structural Factors in the Market

Though mature, Japan’s coffee market still offers steady growth, with specialty and tea demand expanding. While RTD (canned/chilled) and convenience-store coffee are strong substitutes, “the experience of a cup” continues in parallel.

In short, Japan’s exceptional strength comes from carefully building “everyday treat” visit motivation and successfully capturing both coffee and tea demand.

3. The “Now,” in Numbers: World vs. Japan

• North American optimization: Underperforming closures + 1,000+ renovations. A net ~1% decrease in store count.
• Demand headwinds in 2024–25: At-home shift due to higher prices, slower China recovery, geopolitics.
• Recent performance trend: Company disclosures for FY2025 and Q4 indicate slightly negative to flat comps in parts of the year, while full-year revenue still grew. The company aims to return to growth while absorbing restructuring costs and renovation capex.
• Japan’s footprint: Over 2,000 stores, with new formats and seasonal offerings driving traffic; urban prices are finely managed.

4. A Deeper Practical Look at “Why Reduce Stores”

1. Optimizing unit economics
   With higher rent, labor, and utilities, sites where traffic × ticket × gross margin fall below thresholds are closed and reinvested. Starbucks is reallocating toward shorter waits and redefined spaces.

2. Rationalizing the product mix
   Items with high prep complexity can cause lines and dissatisfaction at peak, so menu slimming and rethinking seasonal offers are underway. Phased SKU rationalization has been reported in the U.S.

3. Rebalancing the regional portfolio
   Considering China competition and boycott risks in some regions, the weight of investment is being adjusted over time.

Put simply, from expanding the count to honing the quality. A temporary net decline occurs in that process.

5. For New Café Entrants — Your Winning Blueprint

5-1. Four Pillars to Avoid the “Same Playing Field”

1. Speed: Mobile prepay + pickup shelf, tight back-of-house flow, and execute basics quickly and well.
2. Specialization: One strong craft (e.g., single-origin, latte art, hand-drip, on-site roasting, Japanese black/green tea). #Matcha / #Hojicha resonates with younger segments.
3. Story: Local ingredients, tableware, interior that create a reason to visit. If you become a destination, you gain pricing power.
4. Digital: Membership, prepay, subscription from day one. Even with modest traffic, LTV wins.

5-2. Choosing Location & Format (Examples)

• A: Station/office traffic (26–50 m²)
  Aim for “three drinks in 30 seconds” (drip/latte/tea). Win on throughput.
• B: Residential / near schools (50–80 m²)
  Push afternoon treats (baked goods/pudding) and a takeout window. Capture family weekend strolls.
• C: Tourist spots / attractions (33–66 m²)
  Photo appeal × local ingredients to become a destination. Queue choreography is critical.
• D: Micro-kiosk (10–20 m²)
  Coffee stand or matcha lab. Plan 1.5 staff operation; keep rent within 8–10% of sales.

5-3. Sample P/L (33–50 m², takeout-leaning)

• Assumptions: Avg ticket ¥700; 220 cups weekday / 280 weekend; monthly sales ~¥5.0–5.5M.
• Gross margin: Drinks 70% / Food 55% mix → blended ~63%.
• Fixed costs: Rent ¥350k; labor (approx. 150–170 staff-hours/week) ~¥1.5M; utilities/telecom ¥200k; depreciation/misc ¥150k.
• Operating income: ~¥700k–900k/month (ex-weather/seasonality).

Illustrative only. Results vary by site, labor, yield. Before opening, validate “peak-time seconds per step”.

6. Menu Design: Make Speed, Experience, and Cost Coexist

• Three layers: “Instant” (fast staples), “Delight” (seasonal/limited), “Craft” (hand-drip/single-origin).
• Strengthen tea: Tea demand is strong in Japan. Matcha, hojicha, and Japanese black tea are quick differentiation levers.
• Make cost visible: Standardize syrup/topping scoops; shared prep for hot/cold to minimize waste.
• “One photo tells the story”: Shoot the seasonal hero with attention to light and backdrop—organic social becomes free acquisition.

7. Operations: Design to “Avoid Lines” From Day One

• Back-of-house flow: Layout so cups/milk/ingredients are within a 20-second reach.
• Disperse orders: Priority lane for mobile orders, pickup shelf, 5-minute reservation slots.
• Split peaks: Tailor daypart menus (e.g., fresh bakes a.m., light meals noon, sweets p.m.).
• “Translate the wait”: Offer complimentary bottled water first and show order progress, shrinking perceived time.

8. Marketing: Turn Regulars Into “Members”

• Step one: membership: Use LINE / app to link purchase history → preferences → recommendations.
• Ritualize seasons: Sakura / first flush / Halloween / Holiday—Japan has many seasonal triggers. Pair a photo + micro-story for each.
• Local co-creation: Collaborate with local ceramics / sweets / produce for newsworthy moments.
• Price ops: Location- and time-based pricing can work in Japan. Nudge prices around demand peaks—just a bit smarter.

9. Pros / Cons of Entry (Plus Alternatives)

Pros

• Relatively modest investment can work (kiosks/pop-ups/mobile).
• Locally rooted brand equity endures.
• Plenty of adjacency (tea/matcha/bakes).

Cons / Risks

• Rising labor, ingredients, utilities make gross margin management tight.
• Lines = lost opportunities (thus seconds-level design is mandatory).
• Weather/seasonality swings—smooth with delivery/RTD.

Alternative Models (“A store isn’t the only path”)

• Micro-kiosk (10–20 m²): Capture morning & lunch at station fronts/office lobbies.
• Mobile (truck/cart): Events/markets turn more cost variable.
• Roastery & subscription: Fewer seats, higher checks; bean sales/subscriptions stabilize revenue.
• RTD (bottle/can) × EC/wholesale: Build the “buy without visiting” line.
• Co-branded stores: Pair with bookstores/flower shops/goods to become a destination.

10. Guardrails for “Low-Regret” Initial Investment

• Prioritize sound & light: Don’t over-index on equipment; invest in materials that reduce reverb and shadow-free lighting.
• Dishwashing is the linchpin: If sink/dishwasher flows extend by 1 m, you lose minutes per day.
• Start with 10 items: After shortening service seconds of your top 3, add gradually.
• POS/app from the start: Membership & prepay reduce cash variance and queues.

11. FAQs

Q. If big chains are closing stores, is it safe for independents to enter now?
A. The big chains’ weakness is hyperlocal adaptation. Small and fast can win. As majors focus on menu pruning and remodels, niches open up.

Q. What makes a safe location?
A. First make sure rent ≤ 8–10% of monthly sales. Next, seek destination anchors (bookstores, parks, cultural venues) that drive purpose visits.

Q. Does leaning into tea (e.g., matcha) truly work?
A. It’s a global trend. While sourcing has challenges, it’s a differentiation lever. Adopt it with quality control and supplier diversification.

Q. How should I price?
A. Location-linked thinking is spreading in Japan. Plan for micro-adjustments that reflect costs and demand.

12. What’s Next After “Global Down, Japan Up”?

• Global: Expect a two-step: polish → expand. Closures are temporary; after remodels and new formats, a recovery phase is likely.
• Japan: Leverage the 2,000+ store footprint while deepening tea-focused formats, seasonal experiences, and tourism integration. With urban price design, earnings volatility should stay contained.

13. Bottom Line — Enter the Café Game “Small, Fast, and on a Different Field”

• Globally, Starbucks is shifting from quantity to quality—thinning underperformers and redesigning spaces and ops.
• In Japan, localization (tea/season/landscape) is working, and 2,000+ stores still find demand.
• For entrants, avoid sameness with Speed × Specialization × Story × Digital; combine kiosk / mobile / RTD to slice risk.
• First 90 days: seconds-level flow design → 10-item mini menu → membership → seasonal hero content. Build in that order, and you can deliver “joyful lines” at your scale—gentle yet disciplined.

Key Sources (Primary / Respected Media)

• Restructuring, closures/remodels, magnitude: Reuters; Starbucks official statements (Message from Brian)
• 2024–25 demand environment (U.S./China/Middle East): Reuters earnings coverage & guidance updates
• Full-year / quarterly summaries: Starbucks IR (FY2025 Q4 release)
• Japan store counts & market presence: Starbucks Coffee Japan “History” and “Company Profile”
• Japan’s location-linked pricing: The Straits Times / Japan Today
• Tea-focused / seasonal plays / landscape adaptation: Starbucks Stories Japan (Tea & Café / SAKURA), Condé Nast Traveler (Kyoto machiya store)
• Matcha/tea trend: Financial Times (#MatchaTok), etc.