Starbucks Announces Major Changes toRevamp Business Amid Sluggish Sales
Starbucks, the global coffee giant, announced on September 16, 2024, that it will undergo significant changes to address lagging sales and streamline its operations. The company revealed plans to lay off over 1,000 corporate employees and remove several unpopular and complex menu items. This move is part of a broader effort to simplify its offerings, reduce operational complexity, and focus on its most profitable products. Among the items being cut are certain Frappuccino blended drinks, the Royal English Breakfast Latte, and White Hot Chocolate. These beverages were identified as either low in customer demand, time-consuming to prepare, or too similar to other items on the menu. By trimming 30% of its menu, Starbucks aims to improve efficiency and reduce costs, a strategy that has become increasingly common among retailers and restaurants looking to optimize their operations.
The decision to streamline the menu follows a series of challenges the company has faced in recent quarters. Starbucks’ sales have decline for four consecutive quarters, marking the longest stretch of sluggish growth in years. Customer dissatisfaction with high drink prices and long wait times has contributed to this downturn, with some consumers opting to skip their visits to Starbucks altogether. Additionally, the rise of mobile ordering has introduced new pressures, as over 30% of Starbucks’ orders now come from customers using their phones to place and pick up their purchases. This shift has sometimes overwhelmed baristas during peak hours, further straining the customer experience.
In another significant move, Starbucks announced that it will cut around 1,100 corporate jobs, targeting positions in its headquarters and other administrative roles. The company also revealed plans to eliminate “several hundred” unfilled positions and implement new requirements for its leadership team. Executives at the vice president level and above will now be required to work from the company’s offices in Seattle or Toronto at least three days a week. This shift toward in-person work reflects a broader effort to foster collaboration and accountability within the company’s leadership ranks.
These changes are part of a comprehensive turnaround strategy spearheaded by Starbucks’ new CEO, Brian Niccol. Niccol, who joined the company in August 2024 after previously leading a successful turnaround at Chipotle, has been tasked with reviving Starbucks’ fortunes. He has already made waves by initiating several changes aimed at stripping away complexity and refocusing the brand on its core values. Niccol has been vocal about his belief that Starbucks had strayed from its roots as a “community coffeehouse” and had become too focused on fast, mobile-order-driven transactions. He has expressed a desire to restore the company’s identity as a welcoming, community-oriented space where customers can gather and connect over their favorite beverages.
To achieve this vision, Niccol has introduced several initiatives aimed at reinvigorating the Starbucks experience. For instance, he has reintroduced the tradition of baristas doodling on customers’ cups, a practice that had been scaled back in recent years. He has also brought back self-serve milk and sugar stations, a move that adds a touch of personalization and convenience for customers. These changes reflect a broader effort to reclaim the soul of the Starbucks brand, which Niccol believes has been lost in recent years amid the rise of mobile ordering.
Looking ahead, Starbucks’ turnaround efforts will undoubtedly be closely watched by both investors and customers. With its streamlined menu, reduced workforce, and renewed focus on community and customer experience, the company is betting on a return to its roots as the key to restoring growth and profitability. While the road ahead will likely be challenging, Niccol’s track record as a “Mr. Fix-It” for struggling chains suggests that Starbucks is in capable hands. Whether these changes will be enough to reverse the company’s fortunes remains to be seen, but one thing is clear: Starbucks is committed to reinventing itself and reclaiming its position as a beloved gathering place for coffee lovers around the world.
