Starbucks is set to trim its corporate workforce by 1,100 employees as part of a strategic shakeup under Chairman and CEO Brian Niccol.

The move, announced in a company-wide letter on Monday, also includes eliminating several hundred open but unfilled roles.

By midday Tuesday, affected employees will receive notifications, with individual follow-ups scheduled to discuss severance and career transition support.

This restructuring marks a pivotal moment for the coffee giant, which has been grappling with sluggish sales, operational inefficiencies, and a waning customer experience.

Niccol, who was brought on board last September to engineer a turnaround, has been vocal about the need to cut through bureaucracy and sharpen decision-making.

“Our intent is to operate more efficiently, increase accountability, reduce complexity and drive better integration,” he wrote in his message to employees.

Also Read: Starbucks trims workforce by 2,000

Aiming for a more agile Starbucks

The restructuring targets redundant roles and layers of management that, according to Niccol, have slowed Starbucks down.

“Our size and structure can slow us down, with too many layers, managers of small teams and roles focused primarily on coordinating work,” he noted.

His vision is to create leaner, more responsive teams that can execute decisions without bottlenecks.

Baristas and frontline retail staff – the backbone of Starbucks’ operations – will not be affected by these cuts. The corporate support workforce of 16,000, including roasting, manufacturing, warehouse, and distribution employees, will also be spared.

However, the impact on employees based in Seattle, Starbucks’ headquarters, remains unclear.

The financial struggles of Starbucks have intensified pressure to rethink its approach. Global same-store sales fell 2% in the 2024 fiscal year, ending 29 September.

In the US, customers have pushed back against rising prices and extended wait times. Meanwhile, in China – Starbucks’ second-largest market – low-cost competitors have been gaining ground.

Brewing a turnaround plan: ‘Back to Starbucks’

Niccol’s turnaround strategy, dubbed “Back to Starbucks,” is designed to rekindle the brand’s essence while improving efficiency. It involves a more focused menu, optimised pricing, and reimagined café designs reminiscent of Starbucks’ early years.

The CEO – who gained respect from peers for his turnaround of Chipotle years before – is also experimenting with ordering algorithms to better balance mobile, drive-thru, and in-store demand.

A more disciplined corporate structure is another cornerstone of this strategy.

“We believe it’s a necessary change to position Starbucks for future success,” Niccol stated, stressing the need for agility.

While corporate employees are working remotely this week, unless instructed otherwise, affected staff will receive full pay and benefits through at least 2 May.

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Reinforcing workplace policies

Apart from workforce restructuring, Starbucks is also reinforcing its hybrid work expectations.

While the three-day in-office policy remains unchanged, Niccol signalled tighter enforcement, particularly for executives. Vice presidents and above must now be physically present in either the Seattle or Toronto offices three times a week.

Niccol himself operates from Newport Beach in California, commuting to Seattle as needed through a special arrangement outlined in his contract.

Starbucks provides a corporate jet for his travel, a perk that has raised eyebrows given the broader cost-cutting measures.

For directors and lower-level employees, existing remote arrangements remain intact, but new hires will be required to be based in Seattle or Toronto.

Financial crossroads: The long road to recovery

Starbucks has been navigating choppy financial waters for some time. The last quarter of 2024 saw a 4% dip in café sales and a 23% drop in profit-per-share compared to the previous year.

However, revenue remained relatively steady, and Niccol took comfort in the fact that the decline wasn’t as severe as in earlier quarters.

“While we’re only one quarter into our turnaround, we’re moving quickly to act on the ‘Back to Starbucks’ efforts and we’ve seen a positive response,” he said back in January.

The price of leadership

Niccol is the fourth CEO to take the helm at Starbucks since 2022, and the company rolled out a generous compensation package to secure his leadership.

Since joining, he has received US$95.8 million in compensation – $90.2 million in stock awards to replace the equity he left behind at Chipotle, plus a $5 million signing bonus and a $61,538 salary.

For now, Starbucks is betting that a leaner corporate structure and a renewed focus on its core strengths will pave the way for a stronger future.

As Niccol pushes forward with his restructuring plan, the question remains: will his “Back to Starbucks” vision be enough to reignite the brand’s growth?