The CEO believes there’s opportunities to operate more efficiently, like greater accountability and removal of duplicated efforts
Starbucks’ ongoing comeback plan will now include layoffs.
CEO Brian Niccol said in a letter Friday that the brand will have “job eliminations and smaller support teams moving forward” as it looks to revitalize the company. The layoffs will not impact in-store employees.
The changes will be announced by early March.
“I do not take these decisions lightly, and I appreciate that this will create uncertainty and concern between now and then,” Niccol said in the letter. “I wanted to be transparent about our progress and our plans and ensure that you hear about this work directly from me.”
Starbucks plans to “examine the role, structure, and size” of its support teams worldwide to enact a global transformation, Niccol said.
The executive believes the coffee giant has opportunities to operate more efficiently. That includes ensuring each worker has clear responsibilities and is held accountable for achieving objectives, staying focused on priorities by removing complexity and conflicting goals, and breaking down silos in favor of coordinated efforts.
“We need to meaningfully change how our support teams are organized and how we work, making sure that we have the capacity and capabilities to deliver on Back to Starbucks, and are prioritizing the areas that have the biggest impact on the experience in our stores,” he said.
Niccol’s overall goal is for Starbucks to return to what he thinks made it great—a coffeehouse where customers gather and are welcomed by hospitable, skilled baristas.
The chain has worked to enhance the in-store experience by bringing back the condiment bar, setting an objective of four-minute wait times, adding staffing in over 3,000 stores, writing order names on cups, and offering ceramic mugs. Starbucks also removed the upcharge for non-dairy milk and shifted from using discounts to attract guests to highlighting the brand’s story and coffee leadership.
Another big change is a new code of conduct policy. Starbucks customers must pay if they want to stay in the dining room or use the bathroom. For years, the brand allowed guests to hang around without issues after a 2018 controversy involving two Black men who were arrested at a Philadelphia-based Starbucks. The individuals were there for a meeting but hadn’t paid for anything. At the time, the shop had a policy of not letting guests stay if they hadn’t paid.
The latest policy also outlaws discrimination or harassment, drinking outside alcohol, smoking, vaping, drug use, and panhandling. Violators will be asked to leave, and police could get involved, if necessary.
As for retaining team members, Starbucks doubled paid parental leave for employees and aims to promote internationally for 90 percent of retail leadership roles in three years.
North America and U.S. same-store sales declined 6 percent during the chain’s fiscal fourth quarter. The comp was dragged by a 10 percent plunge in comparable transactions (traffic), partially offset by a 4 percent lift in average ticket. Traffic declined across all channels and dayparts.
Starbucks is also dealing with a union battle in the background. Thousands of employees went on strike around Christmas after Starbucks United and the coffee giant couldn’t strike a deal. Employees also recently filed 36 new federal unfair labor practice charges against the brand for allegedly firing union supporters.
