Starbucks plans to cut 5 percent of its global workforce due to a slowdown in sales growth. It has more than 29,000 store locations worldwide with around 350,000 employees. This announcement came from Kevin Johnson, the Chief Executive Officer of Starbucks, last Tuesday.
Starbucks is planning to streamline its corporate offices soon. This means approximately 350 employees for the most part at the Seattle headquarters, will be losing their jobs. The company admits that the decision was difficult, but it has undergone months of consideration through the lens of the company’s mission and values.
The targeted layoff groups will be in marketing, creative, product, technology, and store development. Roles at the store level are excluded from the cuts. The layoffs were not unexpected. Starbucks had mentioned that an undetermined number of job cuts were coming and there would be some employee shifts between company departments to rekindle investors’ interest.
Kevin Johnson also mentioned that the changes aim to give emphasis on fewer priorities and alter how the company’s functional teams work. He believes that the restructuring plans will bring accelerated innovation that’s pertinent to the customers, stimulating to employees/partners, and make the business more agile in an evolving retail environment.
This is to provide more clarity on the work that’s essential than what is not. The cut of non-restaurant workers is to support retail stores pump slowing sales and help the coffee chain to become nimble.
The report that originated from the Wall Street Journal stated that Starbucks has been failing to keep pace with U.S. sales for several quarters. This led to underperforming company-owned locations being shut down.
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To stimulate more customers to spend more time in the store consuming frappuccinos, tea, and snacks, Chief Operating Officer Roz Brewer mentioned that the coffee chain also shifted some ‘remedial tasks.’ This was done as a small retail-level restricting to put more focus on service. This has since enabled baristas to spend more time with customers.
Two months ago, Starbucks gained revenue worth $6.3 billion. That’s $0.6 billion increase compared to the data last September. Its sales in the U.S and Americas increased 4 percent as opposed to the Wall Street’s estimates on revenue, profit, and same-store sales which is 2.7 percent. Also, over the last 90 days, Starbucks has recovered 28% while shares of SBUX are down 0.22% on the day.
The loyalty program of Starbucks, which accounts for 14 percent of all its transactions, grew 15 percent year after year. It has reached 15.3 million members and counting since the company starter bringing new products to the stores. The ‘happy hour’ deals have stimulated purchasing, especially from larger groups.
Starbucks’ effort to streamline corporate offices shows dedication to both their customers and retail employees. They are focused on growing their membership and improving service interactions in the store. These cuts may lead to growth in the long run.