Starbucks announced that it would lay off 1,100 corporate employees worldwide as part of a sweeping effort to streamline operations and refocus the coffee giant under new Chairman and CEO Brian Niccol. The layoffs, affecting roughly 7 per cent of its 16,000-strong corporate workforce, mark one of the largest staff reductions in the company’s history and come as Niccol seeks to reverse declining sales and revitalize the brand amid mounting customer dissatisfaction.
In a letter to employees released Monday, Niccol outlined the cuts, stating that the company will notify affected workers by midday Tuesday, February 25. Alongside the layoffs, Starbucks will eliminate several hundred open and unfilled positions, further trimming its corporate footprint. “We are simplifying our structure, removing layers and duplication, and creating smaller, more nimble teams,” Niccol wrote. “Our intent is to operate more efficiently, increase accountability, reduce complexity, and drive better integration—all with the goal of being more focused and able to drive greater impact on our priorities.”
The layoffs will not impact baristas or other in-store staff, nor will they affect employees in roasting, manufacturing, warehousing, or distribution roles. Starbucks employs approximately 3,61,000 people globally, with about 2,11,000 in the U.S., according to its 2024 fiscal annual report. The cuts target corporate support roles, which Niccol described as overly layered and bogged down by bureaucracy. “Our size and structure can slow us down, with too many managers of small teams and roles focused primarily on coordinating work,” he noted, echoing sentiments he first raised in January when he warned of impending layoffs by early March.
Niccol, who took the helm in September 2024 after leading Chipotle Mexican Grill to a successful turnaround, has spearheaded the “Back to Starbucks” initiative to address sluggish performance. The company reported a 3 per cent drop in net sales to $9.1 billion in its fiscal fourth quarter of 2024, ending September 29, with global same-store sales falling 2 per cent for the year. In the U.S., customers have balked at rising prices and lengthening wait times, while in China, Starbucks’ second-largest market, cheaper competitors have eroded its share. Though recent changes, such as eliminating extra charges for non-dairy milk and streamlining the menu, have shown early signs of boosting store traffic, the company’s latest quarter still saw a 4 per cent decline in same-store sales and a 23 per cent drop in earnings per share.
The layoffs are part of a broader restructuring that includes trimming the menu by 30 per cent by fiscal year-end to speed up service and refocus on core offerings. Starbucks shares edged up less than 2 per cent in Monday trading, reflecting cautious investor optimism about Niccol’s strategy. However, the cuts have sparked mixed reactions. On X, some users hailed the move as a necessary correction for an overburdened corporate structure, while others questioned the timing amid ongoing economic uncertainty.
Starbucks has pledged comprehensive support for departing employees, including severance packages and career transition services. Meanwhile, Niccol also announced an updated remote work policy, mandating that North American leaders at the vice president level and above report to offices in Seattle or Toronto at least three days a week, though current remote workers at lower levels can retain their status.
Affected employees are receiving notifications, with the company promising clarity on new roles and structures by the weekend. The layoffs signal a pivotal moment for Starbucks as it seeks to reclaim its identity as a community coffeehouse while navigating a competitive landscape, one where efficiency, not just espresso, may determine its future success.