Starbucks lays off over 1,000 jobs and slashes 30% of its menu
Starbucks announced on Monday that it will lay off over 1,000 corporate workers and simplify its menu in a bid to turn around lagging sales. The restructuring aims to streamline operations as the coffee chain continues to face challenges.
Starbucks to lay off over 1,000 workers and cut menu by 30%The company plans to cut about 30% of its menu, including several Frappuccino blended drinks, the Royal English Breakfast Latte, and White Hot Chocolate. Starbucks stated that these items are not commonly purchased, can be complex to make, or overlap with other beverages on the menu.
Following a decline in sales for four consecutive quarters, the company has already removed items like iced energy drinks and its olive oil coffees. The cuts reflect a broader trend where retailers and restaurants are reducing choices to focus on their most profitable offerings.
Starbucks has experienced a decrease in customer visits, attributed to high drink prices and prolonged wait times. Additionally, over 30% of orders now come from customers using mobile apps, which has occasionally strained in-store workers during peak hours. Hundreds of Starbucks locations have also voted to unionize, highlighting concerns over pay, benefits, and working conditions.
Can nostalgia save Starbucks? A look at their big bet
In its layoff announcement, Starbucks stated that it would eliminate around 1,100 corporate support roles and several hundred additional unfilled positions. CEO Brian Niccol, who joined the company from Chipotle in August 2024, emphasized the need to simplify the company structure by reducing layers and duplication to create more agile teams.
Employees affected by the layoffs will receive a “comprehensive severance package,” which includes continued pay and benefits until at least May 2. The package also features severance based on tenure, six months of healthcare coverage via COBRA assistance, and one-on-one career coaching.
Starbucks employed about 361,000 workers globally as of September 2024, with approximately 211,000 in the US. Most employees are in-store staff, who will not be impacted by the layoffs affecting the company’s 16,000 corporate support roles.
In an effort to enhance in-person collaboration, Niccol also announced that North American vice presidents and higher will be required to work in Seattle or Toronto offices at least three times a week. While current remote work policies for lower positions remain unchanged, new hires will need to be located near these offices unless designated for remote work.
Niccol initiated a “Back to Starbucks” plan after taking leadership on September 9, focusing on core products and improved pricing strategies. The company reported flat revenue year-over-year for its first quarter under his management, with earnings per share of $0.69 dropping 23% compared to the same quarter last year. Global same-store sales and foot traffic declined 4% and 6%, respectively, marking four consecutive quarters of declines.
Starbucks has committed to start trimming its menu beginning March 4, with additional reductions scheduled throughout the upcoming months. This effort will culminate in a approximately 30% menu reduction by the end of the 2025 fiscal year, which ends in September 2025, to make room for new product innovations.
The notable Frappuccino items that will be discontinued include the Espresso Frappuccino, Caffè Vanilla Frappuccino, Java Chip Frappuccino, White Chocolate Mocha Frappuccino, Chai Crème Frappuccino, Caramel Ribbon Crunch Crème Frappuccino, Double Chocolaty Chip Crème Frappuccino, Chocolate Cookie Crumble Crème Frappuccino, and White Chocolate Crème Frappuccino. Other removed items include the Iced Matcha Lemonade, White Hot Chocolate, Royal English Breakfast Latte, and Honey Almondmilk Flat White.
Despite these cuts, Starbucks plans to introduce new items, including its previously mentioned Lavender beverages, which will be available with the spring menu launching in early March along with new offerings like the Iced Cherry Chai and Jalapeño Chicken Pocket.
Featured image credit: June Andrei George/Unsplash