In a significant move to streamline operations, Starbucks has announced the layoff of 1,100 corporate employees globally.
This decision, driven by the new Chairman and CEO Brian Niccol, aims to enhance efficiency, increase accountability, and reduce complexity within the organization.
The announcement was made in a letter to employees, highlighting the company’s intent to operate more efficiently and drive better integration.
Starbucks Layoff Announcement, Reasons and Impact
The announcement was made by Brian Niccol in a letter released on Monday. Niccol stated that the affected employees would be informed by mid-day Tuesday.
In addition to the layoffs, Starbucks is also eliminating several hundred open and unfilled positions.
Brian emphasized that the company’s size and structure had slowed down operations.
He pointed out that there were too many layers and managers of small teams focused primarily on coordinating work.
Brian, who was hired last fall to turn around sluggish sales, has been focused on improving service times, especially during the morning rush.
He is also working on reestablishing Starbucks locations as community gathering places.
The layoffs are part of a broader strategy to reduce the complexity of the company’s structure. They also aim to eliminate silos that hinder communication.
Brian noted that all work must be overseen by someone who can make decisions, ensuring a more streamlined and efficient operation.
Starbucks employs 16,000 corporate support staff worldwide. This figure includes roles that are not impacted, such as roasting and warehouse staff.
Baristas in the company’s stores are not included in the layoffs. They make up most of the company’s 361,000 employees worldwide.
The focus of the layoffs is primarily on corporate roles that have been identified as redundant or inefficient.
Future Plans and Strategic Changes
Starbucks’ global same-store sales, or sales at locations open for at least a year, fell by 2% during its 2024 fiscal year, which ended on September 29.
In the U.S., customers have grown frustrated with price hikes and increasing wait times.
Meanwhile, in China, Starbucks’ second-largest market, the company is facing mounting competition from cheaper rivals.
Despite these challenges, Starbucks exceeded most sales expectations in its most recent quarter.
This success is attributed to changes implemented by Brian, such as stopping the extra charge for non-dairy milk and streamlining the menu.
Brian has also been experimenting with ordering algorithms to better manage the company’s mix of mobile, drive-thru, and in-store orders.
These changes are aimed at improving service times and enhancing the overall customer experience.
Brian’s vision for Starbucks includes reestablishing stores as community hubs and improving service times, particularly during peak hours.
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