Islamabad: Starbucks will lay off around 900 employees in non-retail roles and close roughly 100 of its least profitable stores across North America, the company announced Thursday as part of a $1 billion restructuring plan. Some UK stores will also be affected.
The move follows six straight quarters of declining US sales, as consumers rethink spending amid years of high inflation. Starbucks eliminated 1,100 corporate positions earlier this year and plans to close many vacant roles as part of the latest round of cuts, reports BBC.
CEO Brian Niccol said the restructuring aims to “reinforce what is working and prioritise resources” to build a “better, stronger, and more resilient Starbucks.” The company also plans to refurbish more than 1,000 stores in the next year to improve design and customer experience.
The cuts have drawn criticism from Starbucks Workers United, which represents employees at hundreds of US stores. The union said the layoffs demonstrate that “things are only going backwards” and urged the company to prioritise frontline staff in resolving ongoing disputes over working conditions and union contracts.
About 90% of the $1 billion restructuring cost is expected in North America, including $150 million in employee separation costs and $850 million related to store closures. Shares in Starbucks fell 1% following the announcement.
The restructuring effort is part of CEO Brian Niccol’s “Back to Starbucks” turnaround strategy, which also includes cutting the menu and renovating over 1,000 other locations to enhance the customer experience. Some failed initiatives, such as pickup-only stores, are being shut down or converted back into full-service coffeehouses. By focusing resources on profitable, well-designed stores, the company hopes to improve its overall performance and win back dissatisfied customers
