Starbucks is set to lay off 1,100 corporate employees globally as part of a restructuring plan announced by new Chairman and CEO Brian Niccol. In a letter to employees released on Monday, Niccol explained that the move is aimed at streamlining operations and improving efficiency within the company.
The layoffs will be communicated to affected employees by mid-day Tuesday, and several hundred unfilled positions will also be eliminated. Niccol emphasized the company’s goal to operate more efficiently, increase accountability, reduce complexity, and enhance integration across departments. However, the layoffs will not affect baristas at Starbucks locations or roasting and warehouse staff.
Starbucks, which employs around 16,000 corporate support workers globally, has been facing challenges in its corporate structure, with Niccol acknowledging that too many layers of management and redundant roles have been slowing decision-making. “Our size and structure can slow us down,” Niccol said in the letter. “Too many layers, managers of small teams, and roles focused primarily on coordinating work” were contributing to inefficiency.
Niccol, who took the helm of Starbucks last fall, has been tasked with revitalizing the company, which has seen a decline in sales. The company’s global same-store sales fell by 2% in the fiscal year ending September 29, 2024. In the US, customers have been put off by rising prices and longer wait times, while in China, competition from cheaper rivals has led to growing challenges.
As part of his plan to turn the company around, Niccol is working on improving service times, particularly during busy morning hours, and restoring Starbucks stores as community gathering spaces. Additionally, the company is cutting certain items from its menu and tweaking its ordering algorithms to better manage mobile, drive-thru, and in-store orders.
Starbucks shares were relatively flat in premarket trading on Monday, as the company navigates these changes aimed at reinvigorating its operations in an increasingly competitive market.
(With AP Inputs)