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Starbucks begins corporate restructuring, job cuts this week

CEO: ‘We must knock down the barriers’ to succeed

Facing pressure to bring shareholder value to the company amid sluggish sales, Starbucks is cutting jobs and restructuring positions at its Seattle corporate office starting this week, according to an internal memo written by Starbucks CEO Kevin Johnson.

“We are going to make some significant changes to how we work as leaders in all areas of the company and how functional groups are structured to support our retail stores,” Johnson said in Sept. 20 memo obtained by Nation’s Restaurant News. 

“Put directly, starting next week and into mid-November there will be leadership shifts and non-retail partner impacts as we evolve the direction of teams across the organization in size, scope and goals.”

Johnson said the decisions are “difficult” but are being made “through the lens of Our Mission and Values.”

The company declined to say how many employees will be laid off during the fall downsizing.

The layoffs come during a shaky year for Starbucks.

In June, Starbucks revealed plans to close about 150 stores in 2019. That’s triple the number of average closures the company typically makes in a year.

Howard Schultz, the visionary who built Starbucks into a global empire, stepped down as executive chairman and member of the board of directors over the summer. He made one final public appearance for the brand when it opened its first café in Italy last month. 

For the third quarter, the company reported a 1 percent growth in same-store sales in the U.S. That’s down from a 2 percent increase in U.S. same-store sales for the second and first quarters of 2018.

The coffeehouse company, which has more than 28,000 locations around the world, was also rocked this spring by a racial profiling scandal that forced the chain to temporarily halt new marketing strategies.  

In recent months, Starbucks has aggressively focused on expanding its digital relationships with customers, adding more stores in China, and introducing premium experiences through its Reserve cafes. Brand leaders have said driving traffic through premium experiences and off-premise sales is crucial to lift dismal same-store sales.

Going forward, Johnson said the changes made at the corporate level are aimed at making the company more agile, especially when it comes to implementing innovation.

“We must knock down the barriers in our decision making and provide more clarity on the work that is important and what is not,” he wrote in the memo. “To this end, our executive leadership team is working with our SVPs to identify new opportunities to help us work more effectively to increase our speed of innovation in an evolving retail environment.”

Contact Nancy Luna at [email protected]

Follow her on Twitter: @FastFoodMaven

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