Starbucks Undergoes Rapid Change, Announces Closures and Layoffs
Starbucks experienced a period of meaningful change in late September, marked by store closures, corporate layoffs, and a strategic refocusing of resources under the leadership of CEO Niccol. These actions followed a comprehensive review of the company’s global store portfolio initiated in April.
Niccol took office with a mandate for change, quickly reshaping the workforce and renewing top management. several leadership positions were filled following the retirements of key figures in technology and coffee supply. Together, Starbucks continued to refine its menu and advertising strategies.
In April, Niccol announced a review of the global store portfolio and new store openings. A more detailed evaluation of North American stores began in July, with completion expected within two months. As of June 29,Starbucks operated 11,450 stores in the USA and Canada,alongside 7,300 licensed stores.
Management aimed to finalize the assessment of underperforming stores by the end of the financial year, September 29th. Last week, the Board of Directors approved a plan involving store closures and corporate layoffs. On September 25th, Niccol informed baristas and corporate employees of the impending changes via email, stating, “These steps were taken to strengthen the useful areas and to direct our resources to them.”
store managers were instructed to liquidate excess inventory, including items like cups, oat milk, and lemonade. Some executives were informed they could perhaps benefit from job-seeking baristas. A Starbucks regional manager described the situation as ”a really fast transformation.”
The closures included some prominent locations, such as a Reserve Roastery in Seattle. Customers at closing stores were provided with QR codes, while affected baristas received notifications stating, “We regret that you have no position in Starbucks. We wish you success in your future work” (Reuters). The news prompted reactions on social media, with baristas sharing their experiences on TikTok.
Christine McHugh, a former Starbucks Vice President, expressed her concern on LinkedIn, stating, ”Starbucks’ spirit is a big blow.” Starbucks responded by stating its intention to re-hire dismissed baristas as new stores open and offered a severance package to impacted employees.
Investors reacted positively to the swift cost-cutting measures. Following the announcements at the end of September, Starbucks shares rose approximately 2.6% (Reuters).
In a video message to employees on Monday, Niccol expressed hope that the large-scale layoffs and store closures would soon conclude, explaining that closing non-profit locations would free up resources for other stores.
The following day, Niccol and Operations Chief Mike Grams held a forum with employees at the company center, detailing their decisions and outlining future plans. Management highlighted the positive impact of increased investments in café service and atmosphere on recent sales.Niccol indicated strong sales figures and announced the upcoming release of an improved mobile application, alongside new food and beverage offerings. He shared a recent experience trying new protein-based drinks, ordering eight and expressing his satisfaction with the products.
Source: Newspaper Oxygen.
