Starbucks will lay off 1,100 corporate employees by Tuesday morning and eliminate hundreds of open roles, the company announced Monday.
In a letter to employees on Monday, CEO Brian Niccol said the company was simplifying its structure by shedding redundant roles and “creating smaller, more nimble teams.”
The layoffs will not affect store employees. Starbucks did not say how many Seattle-area workers would be laid off.
“We believe it’s a necessary change to position Starbucks for future success,” Niccol said.
Niccol first announced in January the company was planning layoffs as he works on a turnaround for the business. Niccol was brought on in September after a rocky year for the Seattle-based coffee giant.
The company had a streak of disappointing financial quarters leading up to Niccol’s hire, with sluggish sales and customer dissatisfaction over the in-store experience and prices.
Partially due to the CEO transition at the end of Starbucks’ fiscal year, the company suspended a financial forecast for 2025.
Niccol has branded his plan for a turnaround as “Back to Starbucks,” a campaign that focuses on more sharpies, slimmer menus, less complicated pricing structures and remodeled cafes that bring back memories from the company’s early days.
Streamlined corporate ranks are also a part of that plan.
The intent of the layoffs are “to operate more efficiently, increase accountability, reduce complexity and drive better integration,” Niccol said in his letter Monday. “All with the goal of being more focused and able to drive greater impact on our priorities.”
Starbucks expects affected employees to be notified by Tuesday morning. Corporate employees were not expected to work in the office this week, unless told otherwise by their team leaders.
Starbucks has roughly 361,000 employees worldwide. About 16,000 of those employees are in corporate support roles, which include roasting, manufacturing, warehouse and distribution workers who will not be affected by layoffs.
The company had about 3,750 employees based at its Sodo headquarters as of 2023.
Starbucks will provide current pay and benefits to laid off workers through at least May 2.
Affected employees were notified Monday and will have a one-on-one follow-up meeting on Tuesday to discuss severance and career support resources.
Niccol’s letter also addressed Starbucks’ hybrid work policy. The company isn’t changing its rule of three days in the office per week, but Niccol signaled stricter enforcement for executives. At the vice president level and above, executives will be required to be in either the Seattle or Toronto offices three days per week.
Niccol is based at his home in Newport Beach, Calif., and travels to the Sodo headquarters when needed, a stipulation carved out for him in his offer letter in August. Starbucks provides a jet for his commute.
Any employees at the director level and below who have remote status currently will keep it, but those in future roles will be required to be based in Seattle or Toronto.
Starbucks reported during its most recent quarter, the last three months of 2024, that sales at its cafes slipped again by 4% compared to the year before. Profit-per-share also dropped 23%.
But revenue stayed relatively flat from the year before and the dip in sales wasn’t quite as steep as prior quarters, which Niccol took as a good sign.
“While we’re only one quarter into our turnaround, we’re moving quickly to act on the ‘Back to Starbucks’ efforts and we’ve seen a positive response,” he said in January.
Niccol, who is the fourth CEO for Starbucks since 2022, was hired away from Chipotle. Starbucks rolled out a much larger compensation package for him than his predecessor.
Niccol has received $95.8 million in compensation from Starbucks since his hire, $90.2 million of which is in the form of stock awards to substitute the Chipotle shares he left behind. He also received a $5 million signing bonus on top of a $61,538 salary.
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