Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Starbucks will cut 1,100 office jobs as new chief executive Brian Niccol attempts to revive the world’s biggest coffee shop chain.
The company said on Monday that staff in corporate roles will be required to work remotely this week as it informs employees who will be laid off.
The job reductions are the first for Starbucks corporate workers since 2018 when about 350 were eliminated. Starbucks is not cutting any jobs inside its cafés.
Employees who are being laid off will receive a message on Tuesday, the company said.
Niccol arrived in September with a goal to turn around Starbucks as foot traffic and sales were spiralling lower. Same-store sales fell 4 per cent in the quarter that ended in December.
In a letter to staff on Monday, Niccol said that Starbucks would cut 1,100 jobs that were at present filled, as well as “several hundred” more open and unfilled positions.
Most of Starbucks’ 361,000 employees work inside the more than 21,000 coffee shops it operates worldwide. About 16,000 are employed in corporate support, including at its headquarters in Seattle, as well as in store development, roasting, manufacturing, warehousing and distribution. Starbucks did not specify the number of corporate support jobs that exist inside the company.
Niccol last month announced the impending job cuts, saying the company had too many layers. “Our intent is to operate more efficiently, increase accountability, reduce complexity and drive better integration,” he said on Monday.
Shares closed 1.3 per cent higher on Wall Street on Monday.
In his message, Niccol said that company leaders with the status of vice-president or higher who have been working remotely will now need to spend at least three days a week in Starbucks’ offices in Seattle or Toronto, the company’s Canadian base. Employees with titles of director and below with remote working status will be able to retain that status.
The employment agreement for Niccol, hired from Newport Beach, California-based Chipotle Mexican Grill, promised him a “small remote office” in the city and said he would not be required to relocate to Seattle. The Newport Beach office has not yet been completed, according to a securities filing last month.
Starbucks said Niccol travels around the world to manage a business that operates in 88 markets, working not only from its Seattle headquarters but visiting stores and engaging with customers and stakeholders. The company reported $36.2bn in revenue last year.
This week Starbucks asked corporate staff to work remotely as it informs the 1,100 employees who will be laid off, citing reasons of privacy. Those whose jobs have been cut will be sent an email from a member of the executive leadership team, the company said.
Read the full article here