Starbucks will lay off around 900 staff and pull down the shutters on some 100 cafes across North America as part of a $1bn restructuring plan to revive the world’s largest coffee chain.
The business, which eliminated 1,100 corporate positions earlier this year, will also close “many” open or vacant positions as it notifies affected employees affected by cuts on Friday.
The 900 Starbucks staff hit by the restructuring work in “non-retail” roles, the company said. It will also close 1% of the coffee houses it opens in North America.
Starbucks is scrambling to reverse its fortunes. The firm’s US sales have dropped for six straight quarters as consumers, grappling with years of higher inflation, think twice before ordering its pricey coffees.
The latest cuts are designed to “reinforce what we see is working and prioritize our resources against them,” Starbucks CEO Brian Niccol wrote in a letter to employees on Thursday. “I believe these steps are necessary to build a better, stronger, and more resilient Starbucks that deepens its impact on the world and creates more opportunities for our partners, suppliers, and the communities we serve.”
But Starbucks Workers United, a union representing workers at hundreds of its stores, said the move “makes it clear things are only going backwards” at the chain. “Fixing what’s broken at Starbucks isn’t possible without centering the people who engage with the company’s customers day in and day out,” it said.
Starbucks attributed about 90% of the restructuring cost to its North American business, with $150m expected in employee separation costs and $850m in costs related to store closures.
Starbucks also plans to “uplift” over 1,000 store locations in the next 12 months, Niccol added, “to introduce greater texture, warmth and layered design”.
In his letter, Niccol did not mention the union organizing efforts at Starbucks. Over 650 Starbucks stores in the US have unionized, with workers pushing for a first union contract.
Negotiations between the union and Starbucks faltered months after Niccol assumed the role of CEO last September, as the union launched its largest strike ever at the company in December.
Starbucks workers with the union have criticized the “Back to Starbucks” changes under Niccol, and have threatened further strikes to push the company to reach a first contract with the union. Starbucks has claimed it is committed to fair bargaining.
“I know these decisions impact our partners and their families, and we did not make them lightly,” Niccol said on Thursday. Shares in Starbucks dropped 1%.