Starbucks to close stores and axe hundreds of jobs following slump in sales
Ben Williams
Featured Image Credit: Justin Sullivan/Getty Images
Starbucks has been no stranger to bold, and often divisive, decisions since Brian Niccol took the reins last year.
From forcing baristas to scribble positive affirmations on takeaway cups, to scrapping its pick-up-only stores in New York because they were ‘overly transactional’, the coffee giant has been busy trying to reinvent itself. Niccol has also pushed through stricter return-to-office rules for corporate staff, remodelled seating after admitting the pandemic shift to takeaway was a ‘misfire’, and even reinstated old-school self-service condiment bars.
But despite this flurry of changes, Starbucks has been struggling to keep customers coming back. Luckin Coffee has already overtaken it in China, competition from US drive-through chains is getting tougher, and baristas across the States have been pushing back hard against understaffing and management decisions made without their input.
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Now comes the most dramatic step yet. Starbucks has announced it will axe around 900 jobs in the US and shut a number of its worst-performing outlets across America and the UK. The company confirmed that those cut will be support staff positions, with further store closures also planned in Switzerland and Austria.
What’s more, however, is that Starbucks already cut 1,100 jobs earlier this year in February — putting job losses at the coffee conglomerate at the 2,000 mark.
Niccol admitted: “This is a more significant action that we understand will impact partners and customers."
In a letter to employees, he explained that the targeted stores were ‘unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance’.
The cuts follow six consecutive quarters of falling sales in the US, the chain’s most important market, and a year-to-date share price drop of more than 8%. The closures are part of Niccol’s turnaround strategy, which he hopes will speed up service, reduce wait times, and rebuild trust with customers.
Despite the closures, Starbucks insists it’s still on track to expand elsewhere. It plans to open 80 new stores in the UK and 150 across Europe, the Middle East and Africa this financial year.
But not everyone is buying the revival pitch. Workers United, the union representing staff at more than 600 Starbucks stores in the US, said the announcement shows ‘things are only going backwards at Starbucks under Brian Niccol’s leadership’.
They’ve also accused the company of once again making ‘major decisions with zero barista input’ and are demanding more information about the closures.
Whether these sweeping cuts mark the start of a genuine turnaround or simply make things worse currently remains unclear. For now, the world’s biggest coffee chain is closing doors, cutting jobs and hoping its next brew will taste a little less bitter.