MercoPress. South Atlantic News Agency

Starbucks announces large-scale staff downsizing

The job cuts will not affect people working in the cafes or warehousing, manufacturing, distribution, and roasting operations, the company explained

Arguably the world's most important coffee store chain, Starbucks announced Monday the termination of 1,100 corporate jobs, which are not the ones customers usually see in stores. CEO Brian Niccol said the measure was necessary to remove duplicate positions.

After four consecutive quarters of declines, sales went down 4% in the quarter ending in December. “We believe it's a necessary change to position Starbucks for future success,” Niccol said in a statement.

The company also said that hundreds of vacant corporate positions would not be filled as the company faces declining sales due to new competitors, customer complaints about long lines, and the challenge of maintaining fast service while offering a wide range of customizable products. Still, Starbucks' stock has gained nearly 17% over the past year. Starbucks has around 16,000 corporate employees. These cuts are among the largest in the chain's history after cutting 5% of its corporate workforce (some 350 people) in 2018.

The firm insisted that store workers, roasters, and warehouse staff were unaffected by the initiative seeking to streamline operations and boost efficiency. Those affected by the measure are to be notified on Tuesday.

According to the Wall Street Journal, Starbucks was facing a drop in sales due to the appearance of new competitors in a market where Starbucks had almost no rivals until now. Niccol was hired after his well-known tenure at Chipotle, a company whose shares rose 800% under his leadership. With this appointment, the company aims at overcoming the not-so-successful management of Laxman Narasimhan.

The new CEO's salary of US$1.6 million per year would be one of the highest among US executives. It could reach US$23 million with performance bonuses and shares. In addition, he was granted the possibility of working remotely from his home in Newport, California, and has a plane available to travel to the company's offices in Seattle.

In addition to lashing the number of deals and menu options, Niccol has also cut the popular perk of being able to visit a Starbucks location without ordering anything. Self-service condiment bars, where customers can add extra milk and sweeteners, are also being reinstated. According to local media, Niccol went undercover to Starbucks stores to gauge customer hardships first-hand, after which he pledged to speed up service and bring back Starbucks' old cafe vibe.