By Neil J Kanatt and Ananya Mariam Rajesh
(Reuters) – Starbucks said on Monday it would eliminate 1,100 corporate roles as CEO Brian Niccol pushes ahead with his turnaround efforts at the coffee chain, which has been struggling with falling sales.
“We are simplifying our structure, removing layers and duplication and creating smaller, more nimble teams,” Niccol said in a letter to employees.
“Our intent is to operate more efficiently, increase accountability, reduce complexity and drive better integration.”
Niccol was named CEO last year at a time when the company’s shares had lost 40% of their value from the 2021 high due to weak demand in the U.S. and China.
Credited with turning around burrito chain Chipotle Mexican Grill, he put in place the “Back to Starbucks” plan that focused on streamlining business through job cuts and by improving customer experience at its U.S. stores.
Since taking the helm six months ago, Starbucks shares have rebounded more than 22%. They were up nearly 2% in afternoon trading.
“We will continue to hire for priority positions that fit with our new support structure and add capability and capacity we need,” Niccol said, adding the move would not affect in-store teams or the investments Starbucks is making in store hours.
Starbucks employs about 211,000 people in the U.S. and around 150,000 employees internationally, according to its 2024 report.
“Relative to the last major layoff in 2018, I believe the level is significant,” said Jim Sanderson, analyst at NorthCoast Research.
In 2018, Starbucks planned to lay off 350 global corporate employees as part of a restructuring plan under then CEO Kevin Johnson.
Sanderson, however, noted it would be necessary to understand which segments or divisions in the corporation will be impacted by the layoffs and how this fits within Starbucks’ global long-term turnaround strategy.
Separately, Starbucks said it was removing a few “less popular beverages” from the menu, including several frappuccino blended beverages and the white hot chocolate, in line with Niccol’s push to simplify its menu.
(Reporting by Neil J Kanatt and Ananya Mariam Rajesh in Bengaluru; Editing by Arun Koyyur and Alan Barona)
