Starbucks Just announced plans to close unprofitable locations and cut corporate jobs as CEO Brian Niccol focuses on the company's turnaround plan.
In a letter posted to its blog and sent to employees recenty, Niccol shared that the company plans to eliminate 900 non-retail roles and close open positions as part of a US$ 1 billion restructuring effort. The memo said employees will be notified on 26 September 26 and will offer "severance and support packages including benefits extensions."
"We will continue to carefully manage costs and stay focused on the key areas that drive long-term growth," Niccol wrote.
This comes after the company laid off 1,100 employees earlier this year. Niccol said the company plans to use the savings to invest in its stores by adding more customer service employees. Other investments include new coffeehouse designs and innovations.
Corporate employees, including support partners and people managers, are now required to come to the office four days a week starting 29 September, Niccol said in July.
In its latest quarterly results, Starbucks posted its sixth straight quarterly drop in US same-store sales. US same-store sales fell 2 percent, in line with the prior quarter's drop but less than the 2. percent drop that had been forecast. That was driven lower by a 4 percentdecline in comparable transactions. Wall Street expected a sharper 4.5 perdent decline.
Niccol also pointed to plans to reassess the store portfolio in the earnings call.
Now, the company plans to reduce its store count by roughly 1 percent in Canada and the US, reflecting both closures and openings, this fiscal year. By year-end, the total company-operated and licensed stores across the US and Canada will be nearly 18,300. As of Q3, there were 18,842 locations in North America.
"We identified coffeehouses where we’re unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance, and these locations will be closed," Niccol wrote.
Starbucks plans to invest in 1,000 locations over the next 12 months to double down on the cozy coffeehouse atmosphere as it moves away from pick-up-focused customer experiences.