As part of its most recent attempt to cut expenses and increase its investment in its cafes, Starbucks going to close stores and lay off 900 more corporate staff. The majority of the layoffs will impact employees in North America, the Seattle-based coffee chain announced Thursday. The company is eliminating many open positions. Starbucks asked corporate staff to work remotely for the rest of the week and will inform affected employees on Friday.
Since Brian Niccol took over as CEO approximately a year ago, this is the second significant round of layoffs. According to him, the layoffs are necessary to reallocate funds to Starbucks locations, where the company is expanding its workforce and implementing new barista training initiatives. “These steps are to reinforce what we see is working and prioritize our resources against them,” Niccol said in a message to employees.
Starbucks to cut nearly 1,000 jobs and close stores
Starbucks anticipates spending roughly $1 billion on lease exits, severance, and other expenses. In the days ahead, the company intends to begin closing the impacted stores, including its flagship Roastery and Reserve store at headquarters in Seattle.
The actions come after same-store sales declined for six straight quarters, primarily due to rising coffee prices and labor costs. Starbucks is attempting to reduce unprofitable formats and expensive equipment rollouts while streamlining operations and boosting cafe traffic.
Similar strains are being seen in the larger labor market. In recent weeks, ConocoPhillips, Intel, and Merck have all announced layoffs, while other businesses are tightening in-office requirements or consolidating roles. The number of job openings in the United States decreased from 12.1 million in March 2022 to 7.2 million in July of this year.
As of September 2024, Starbucks employed about 10,000 corporate workers in the United States. The corporation laid off 1,100 corporate positions in February and left hundreds more open, mostly in administrative and technology-related positions. In July, a voluntary exit program was implemented. Niccol had previously stated that business performance would determine whether to make additional cuts.
Starbucks said it will transfer baristas to nearby cafes whenever possible and provide severance to those it cannot immediately place. On behalf of the workers in the several hundred unionized Starbucks locations, Starbucks Workers United announced its intention to engage in negotiations with the company.
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