Starbucks shuts down another San Francisco cafe – Business News
Starbucks has pulled the plug on another San Francisco cafe, marking the newest in a string of closures that has stripped the town of more than a dozen places in simply two years.
The store at 295 California Street, a fixture downtown for almost 20 years, shut its doorways Friday, in accordance with the San Francisco Business Times.
It’s at the least the sixth Starbucks to close within the metropolis since final September — the fourth to close thus far this 12 months. It additionally comes on high of seven others the espresso chain shuttered in 2023.
A Starbucks signal is seen in San Francisco, the place the chain has closed more than a dozen shops in two years. Sundry Photography – stock.adobe.com
The closures replicate a combine of financial stress, shifting shopper habits and a broader rethink of the company’s store strategy.
Rising labor prices are half of the problem, particularly in San Francisco, the place wages are among the many highest within the nation.
Like different fast service eating places working within the Golden State, Starbucks is sure by a new fast food minimal wage law to pay their workers $20 an hour — up from $16.50 an hour earlier than the laws went into impact on April 1, 2024.
A examine revealed final month by the National Bureau of Economic Research discovered that the minimal wage hike has price the state 1000’s of jobs.
But a spokesperson for California Gov. Gavin Newsom questioned the veracity of the examine, saying the findings “have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.”
The Starbucks at 295 California Street, a downtown fixture for almost 20 years, closed its doorways Friday. Google Maps
Aides to Newsom level to a UC Berkeley examine which discovered “no negative wage or employment effects” as a end result of the new law.
San Francisco has skilled a sharp wave of retail closures prior to now two years, with national chains, luxurious manufacturers and grocery shops citing theft, high working prices and sluggish downtown restoration as key elements.
Major names together with Rolex, Macy’s, Walgreens, Target, Whole Foods and Nordstrom have both shut places or scaled back operations, usually pointing to surging retail theft and security issues which have pushed up security bills and deterred clients.
While the town and state have enacted new anti-theft legal guidelines and revitalization efforts, the continued loss of storefronts underscores the steep challenges in restoring San Francisco’s retail core.
William Blair analyst Sharon Zackfia instructed the San Francisco Standard that high labor prices and the sluggish post-pandemic restoration make “some of the economics tough” for Starbucks within the metropolis.
“It’s no secret that labor is just innately more expensive in San Francisco, and the city proper has been lagging in terms of return-to-work and office occupancy,” Zackfia instructed the Standard.
A closure discover is posted on the door of the California Street Starbucks, citing the store’s everlasting shutdown. KRON4
Some places had been misplaced when leases expired. Others had been cut to keep up what the company calls a “healthy store portfolio,” a transfer that usually means trimming underperforming websites or lowering overlap in areas the place outlets compete with one another.
That pressure is compounded by the town’s sluggish post-pandemic restoration, with workplace towers nonetheless removed from full.
William Blair analyst Sharon Zackfia instructed the San Francisco Standard that these elements make “some of the economics tough” for Starbucks within the metropolis.
Service has additionally turn out to be a sticking level. Starbucks lately logged its sixth straight quarter of falling same-store gross sales — a measure of income at cafes open for at the least a 12 months — and noticed transaction sizes shrink.
Zackfia instructed the Standard that slower service instances have pissed off clients.
“When speed and service suffer, people start to question why they’re spending as much as they are on their beverage,” she mentioned.
A buyer picks up a cell order at a Starbucks pickup-only location, a format the company plans to scrap nationwide by 2026. Bloomberg by way of Getty Images
In San Francisco, the espresso giant can be abandoning its pickup-only model, the place clients order by way of an app somewhat than on the counter.
Starbucks CEO Brian Niccol introduced the company will scrap the format nationwide by 2026, describing it as “overly transactional and lacking the warmth and human connection” Starbucks needs to ship.
Between 80 and 90 such places throughout the US will both close or be transformed to conventional cafes. One of these could possibly be the Drumm Street store close to the Embarcadero, although Starbucks has not confirmed its destiny.
Some longtime clients see the closures as a signal of overexpansion.
Real property consultants have famous that Starbucks, like different main retailers, opened too many shops clustered carefully collectively, in accordance with the Standard.
That led to an eventual need for consolidation, with the hope that remaining cafes might take in business from people who shut down.
The trend isn’t distinctive to Starbucks. Drugstore chains like CVS and Walgreens, which additionally as soon as expanded quickly in San Francisco, have closed dozens of places lately.
The metropolis now has 40% fewer pharmacies than it did a decade in the past.
Still, the Starbucks pullback is hanging. In October 2023, the company operated 59 company-owned places in San Francisco. By August 2025, that quantity had fallen to between 35 and 37, not counting retailers inside different retailers like Target or Safeway, that are licensed somewhat than company-run.
That means the town has misplaced roughly half its Starbucks in ten years and about 13 to fifteen in simply the previous two.
Starbucks is one of a number of national chains to shutter places in San Francisco, which has been beset with high quality of life issues together with rising price of dwelling and elevated incidents of theft. Tom Nast – stock.adobe.com
For clients, the modifications have been bittersweet.
Mike, a common on the California Street cafe, referred to as the closures a revenue-driven choice.
“You have to minimize liabilities,” he instructed the Standard, including that youthful generations may additionally be steering away from giant company chains in favor of unbiased espresso outlets.
Competition from native favorites additionally performs a function. One buyer prompt the Financial District’s choices, like Devil’s Teeth Baking Company, could also be drawing people away from Starbucks.
Another speculated that new homeowners of sure buildings, together with the California Street property, may need plans to overtake the retail space.
Whether the closures will stop anytime quickly stays unclear. The company nonetheless has 37 storefronts throughout the town, however with more pickup-only cafes more likely to close or convert, the whole might drop additional.
Niccol has mentioned the company is working to improve velocity and repair by hiring more workers, however in high-cost, slow-to-recover cities like San Francisco, even that strategy might have limits.
A spokesperson for San Francisco Mayor Daniel Lurie referred The Post to a number of bulletins made by his workplace, together with lowering pink tape in order to permit small companies to acquire permits faster in addition to waiving allow charges and initial business registration.
The Post has sought remark from Starbucks and Newsom’s workplace.
