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Starbucks plots layoffs, organizational changes

“We must increase the velocity of innovation,” the coffee chain’s CEO wrote in an internal memo.
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Starbucks, struggling with weak same-store sales growth in recent quarters, is planning layoffs and leadership changes, according to an internal memo from the coffee giant’s CEO obtained by Restaurant Business.

“We must increase the velocity of innovation that is relevant to our customers, inspires our partners, and is meaningful to our business,” Kevin Johnson wrote in a message to all Starbucks employees dated Sept. 20. “To accomplish this, 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.”

Starbucks will be implementing the organizational changes from now until mid-November, he said.

“There will be job losses, jobs expanding and some redeployments,” a Starbucks spokesperson confirmed, while declining to provide layoff numbers or specifics surrounding the organizational changes. The shifts will likely affect the vice president and senior vice president levels, not the C-suite, the spokesperson added.

The layoffs were first reported by Bloomberg.

“Change can be difficult, but our culture and our legacy are built on continuing to challenge the status quo,” Johnson wrote.

Starbucks is looking to become more agile by creating smaller teams to help speed the pace of innovation. The chain is also looking to find ways to automate manual processes, the company said.

Starbucks has reported sluggish sales in recent quarters and has even shuttered some units amid declining traffic. The company’s same-store sales grew just 1% in the most recent quarter, while traffic fell 2%.

It’s been a tumultuous time for the company, which in recent months has closed stores for a half day for anti-bias training and has seen the retirement of Executive Chairman and former CEO Howard Schultz.

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