Starbucks is set to terminate approximately 1,100 corporate staff members worldwide as part of a restructuring initiative under the direction of newly appointed Chairman and CEO Brian Niccol.
In a communication dispatched to employees on Monday, Niccol announced that those affected by the layoffs would receive notifications by midday Tuesday. Alongside these layoffs, the company will also remove several hundred vacant positions that remain unfilled.
“Our goal is to enhance efficiency, bolster accountability, minimize complexity, and foster improved integration,” Niccol mentioned in his letter.
Although Starbucks employs around 16,000 corporate support personnel globally, this figure also includes staff members in roles that are not affected, such as roasting and warehouse workers, while baristas in retail locations will not face layoffs.
Niccol had indicated in January that announcements regarding corporate layoffs would be made by early March. He emphasized that all work should be managed by individuals capable of making decisions, as Starbucks strives to reduce structural complexities and dismantle silos that hinder effective communication.
He pointed out, “The size and structure of our company can impede our agility, resulting in excessive layers, managers overseeing small teams, and roles predominantly devoted to coordinating tasks.”
Niccol joined Starbucks last autumn with the intent to reinvigorate sales that had been lagging. He has expressed a desire to enhance service speeds, particularly during peak morning hours, and to reestablish the company’s stores as local community hubs.
Additionally, he is making adjustments to the menu and testing new ordering algorithms to better manage the interplay between mobile, drive-thru, and in-person orders.
In the fiscal year 2024, which concluded on September 29, Starbucks saw a 2% decline in global comparable-store sales, indicating that locations that have been open for at least a year struggled. This downturn was partly attributed to customers in the U.S. becoming weary of price hikes and increasing wait times, while in China, Starbucks faced stiff competition from less expensive alternatives in its second-largest market.
Nonetheless, in the company’s latest quarterly report, Starbucks exceeded most sales projections. Niccol’s initiatives, which included the removal of the surcharge for non-dairy milk and the simplification of the menu, have led to increased store traffic and enhanced service levels.
As a result, Starbucks’ stock experienced a modest rise of less than 2% on Monday.
