More cost-cutting is on the way to Starbucks $SBUX. The coffeehouse chain plans to lay off 900 corporate workers and shut down an undisclosed number of stores across North America as part of its ongoing turnaround plan.
It's part of an ongoing overhaul plan by CEO Brian Niccol, designed to raise profits and make Starbucks a regular part of customers' lives once more
Jeff Greenberg
More cost-cutting is on the way to Starbucks $SBUX. The coffeehouse chain plans to lay off 900 corporate workers and shut down an undisclosed number of stores across North America as part of its ongoing turnaround plan.
The company announced the moves, which will cost about $1 billion for severance payments, lease exits and other store closure costs, in a message to employees Thursday. All corporate employees were asked to work from home for the remainder of the week, with layoff notifications set to occur on Friday.
“These steps are to reinforce what we see is working and prioritize our resources against them,” CEO Brian Niccol said in a message to employees Thursday.
It's part of an ongoing overhaul plan initiated by Niccol, designed to raise profits and make Starbucks a regular part of customers' lives once more. In addition to the layoffs, many open and unfilled positions will also be eliminated, Niccol said.
The store closings come as more than 1,000 Starbucks stores are in the midst of a makeover, which is expected to last through the end of 2026 and will cost approximately $150,000 per store. The changes include more wood paneling and gentler lighting. The company says its aiming for a welcoming environment "where people want to gather. … Think of it as a living room outside your home."
Stores that will be shut down were seemingly judged to be poor candidates for those upgrades. The company did not say how many stores it plans to close, nor give any locations that would be impacted. The number of company-operated stores, Niccol said, would decline by 1% by the end of Starbucks Fiscal Year, even when accounting for recent store openings.
“During the review, we identified coffeehouses where we’re unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance, and these locations will be closed,” Niccol wrote.
Starbucks has reported six consecutive quarters of same-store sales declines. To lure customers back, the company has rolled out a series of changes reviving policies and habits that haven’t been seen since before the pandemic. Workers now once again hand write customers’ names on the cups with a Sharpie and the chain is offering free refills on some “for here” orders, a perk that was previously restricted to its loyalty-program members. Some menu items were also cut to expedite service.
Milk and sugar stations are making a return as well, which will not only let people prepare their coffee just how they want it, but will lighten the load for baristas and should result in quicker turnaround times for getting drinks.
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