White-collar workers are taking another hit as Starbucks announces corporate layoffs. Reports emerging from the company show that the coffee giant plans to eliminate 300 corporate employees in the U.S., with the move a part of its larger turnaround strategy to cut costs and restore growth. The updates don’t stop there. More cuts could be coming to the organization in the coming months, with evidence to suggest an ongoing review of its international corporate workforce.
Green-approned baristas will not be affected by the cuts, and that has largely been a focal point of the company’s “Back to Starbucks” strategy to increase revenue by targeting in-store foot traffic through improved quality of services and offerings on location. Despite the recent history of unrest, this does allow coffeehouse employees to breathe a sigh of relief, but matters are quite different for the corporate workforce.
The Starbucks layoffs are expected to affect 300 corporate workers in the U.S., with plans for cuts to international staff also in the works. (Image: Pexels)
What We Know About the Corporate Layoffs at Starbucks and Its Progress on Its Turnaround Strategy
On Friday, Starbucks announced its third round of layoffs under incumbent CEO Brian Niccol since he took over leadership of the organization. As with its previous cuts, this time, 300 U.S. white-collar workers will be axed from the company’s payroll, although the organization has not specified which departments will be hit specifically. Starbucks is also exploring regional office closures as part of this shift, which means that entire divisions could be shut down in locations such as Atlanta, Burbank, Chicago, and Dallas.
We have little insight into any job relocation services or the nature of the severance packages being offered. What we do know is that Starbucks’ workforce reduction plans could see it incur restructuring charges of $400 million. This will result from $280 million in noncash charges related to its plans to revisit assets such as real estate, and $120 million in cash charges to address severance duties following the layoffs.
In a statement to CNBC, a spokesperson explained, “We are taking further action under the Back to Starbucks strategy, building on our strong business momentum and working to return the company to durable, profitable growth.” For now, the layoffs at Starbucks have been linked to plans to “sharpen focus, prioritize work, reduce complexity, and lower costs.”
Starbucks Doubles Down on Cost-Cutting Goals, but Expansions Also Take Shape
The successful deployment of the turnaround strategy and the achievement of certain cost-reduction goals at Starbucks could result in top executives receiving awards of over $6 million each, according to Reuters, which provides leadership teams with an added incentive to make bold changes to operations. Just last month, the company recorded its strongest sales growth in over two years, which suggests that it is well on its way to achieving its goals, however, its profit margins are not what they used to be.
The company has incurred high costs as part of its reorganization and growth-focused efforts, but as some of them pan out in favor of cuts, there are also some investments on their way. Just last month, the company revealed plans to invest $100 million in expanding its reach in the Southeast. This includes the development of a new corporate center in Nashville, Tennessee, where it expects to employ over 2,000 workers over the next five years. Whether the company will consider moving its talent from regions affected by the layoffs to these locations remains to be seen.
The Corporate Workforce Remains Overwhelmed by the Constant Barrage of Cuts
This isn’t the first time that Starbucks has unleashed layoffs on its corporate workforce, and it is unlikely to be the last. In February last year, the organization laid off about 1,100 corporate employees under the same turnaround strategy. These cuts to corporate are not exclusive to Starbucks and align with a growing trend of organization flattening down operations in pursuit of agility.
An employee from a tech corporation that similarly announced layoffs recently told us, “If it isn’t layoffs at your work, then it’s layoffs in the industry keeping you up at night. If you want to switch industries and move into management at a different operation, you look at the news and see layoffs happening there, too. These announcements don’t seem to be slowing down, and we’re stuck in limbo, whether we’re employed or not.” He added, “Any day could be your last on the job, and there’s no way to come to terms with it.”
Such sentiments are common across the U.S. workforce today, as employees turn to job boards, Reddit posts, and news outlets to prepare themselves for changes at their own organization. This growing disconnect needs to be addressed, as the corporate workforce grows more frustrated every day.
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