Another Starbucks bites the dust: Why have so many SF cafes closed recently? 

Another San Francisco Starbucks location has closed. The cafe at 295 California St. shut its doors Friday after nearly 20 years. 

It’s at least the sixth San Francisco shop the chain has shuttered since September. Neighbors of one Jackson Street location even fought but failed to keep the 30-year-old shop open.  

Meanwhile, the future of another downtown location — a pickup-only shop at 7 Drumm St., near the Embarcadero — is uncertain as Starbucks has announced plans to get rid of stores where customers place orders from phones only, instead of with a barista. 

The wave of closures come on the heels of Starbucks putting the kibosh on seven downtown locations in 2023. 

So, what’s going on with the java giant? Starbucks executives, as well as analysts and customers, point to a host of issues.

Starbucks CEO Brian Niccol announced on the company’s most recent earnings call that it would do away with its pickup-only cafe concept in 2026. He described the model as “overly transactional and lacking the warmth and human connection” the brand strives for. 

Between 80 and 90 U.S.pickup-only cafes will either close or transition to a traditional store. A spokesperson declined to comment on whether the Drumm Street location would close or be converted. 

Some of the San Francisco locations closed when their leases ended. Starbucks shuttered others to ensure “a healthy store portfolio.” 

Starbucks just posted its sixth straight quarterly decline in same-store sales (which measures sales at shops that have been around for at least a year). Transaction amounts decreased, too.

Part of the problem is that Starbucks’ service has gotten slower, according to William Blair analyst Sharon Zackfia. 

“When speed and service suffer, people start to question why they’re spending as much as they are on their beverage,” she said. 

To counteract the issue of overburdened staff, Niccol is investing in hiring. That, in particular, could be affecting store success in SF.

"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," said Zackfia. As Starbucks has been assessing its "store portfolio overall,” SF's dynamics "make some of the economics tough." 

Real estate experts have suggested that the brand opened too many stores too close together, prompting the need for attrition. “There might be an opportunity for another store to absorb the traffic of a closed store,” Zackfia said. 

The city has seen other chain retailers pull back, too. Like Starbucks, CVS and Walgreens spent years rapidly opening scores of stores, only to close many of them in the last few years. Both companies have shut dozens of stores recently, leaving San Francisco with 40% fewer pharmacies than it had a decade ago. 

Starbucks still has 37 locations in San Francisco, excluding cafes located inside other stores, like Target and Safeway, which are licensed and operated by those brands. Starbucks had 59 company-owned SF stores in October 2023 and 71 a decade ago, according to the SF Business Times. 

“It’s all revenue-driven. You have to minimize liabilities,” said Mike, who was a frequent customer at 295 California St. and declined to share his last name. He guessed that Gen Z could also have something to do with it. 

“There’s this movement of the younger generation boycotting bigger companies and going to mom-and-pop shops,” he added. 

One coffee drinker attributed Starbucks’ decline to better options in the Financial District, like Devil’s Teeth Baking Company, while another theorized that the new owner of 295 California St. plans to make changes to the ground-floor retail spaces. A spokesperson for the building did not respond to a request for comment. 

Annie, 25, who also declined to share her last name, said she hopes Starbucks’ exodus will  allow a small business to move in. She was visiting the pick-up only location on Drumm Street — a rarity for her. “I don’t usually come here,” she said. “I just really needed caffeine.”