Starbucks (SBUX) had a rough 2024. Over the past few financial quarters, the coffee giant’s sales have faced difficulties amid recent menu price increases and a boycott from consumers over alleged political alliances in the Gaza war.
In its first-quarter earnings report for fiscal year 2025, Starbucks revealed that its comparable store sales in the U.S. declined by 4% year over year, and its comparable transactions also shrunk by 8%.
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Starbucks’ U.S. operating income, which is the company’s profit after expenses, also decreased by 22%, compared to the same time period the year before.
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Amid these recent declines, Starbucks CEO Brian Niccol, who joined the company in August, has been laser-focused on his new “Back to Starbucks” plan, which aims to reestablish Starbucks as a community coffeehouse.
Some of the changes associated with the plan that Starbucks recently enforced include pausing price increases, simplifying its menu, cutting down wait times for orders to four minutes or less, and much more.
Augusta, Georgia, Starbucks Coffee, inside busy with customers.
Jeff Greenberg/Getty Images
The plan also involves shrinking the company’s workforce. Last month, Niccol warned employees that an unspecified number of corporate layoffs would begin in March.
“Our size and structure can slow us down, with too many layers, managers of small teams and roles focused primarily on coordinating work,” said Niccol in a letter to employees in January.
Starbucks sends a harsh message to employees
In a new message sent to employees on Feb. 24, Niccol confirmed that 1,100 corporate workers will be laid off across the globe this week. In addition, the company is also pausing hiring for hundreds of open job positions.
“We are simplifying our structure, removing layers and duplication and creating smaller, more nimble teams,” said Niccol in the memo to employees. “Our intent is to operate more efficiently, increase accountability, reduce complexity and drive better integration.”
Related: Starbucks makes desperate move to win back employees
Niccol also acknowledged in the memo that the news about job cuts is “difficult,” but emphasized that it is “a necessary change to position Starbucks for future success.”
Starbucks is one of the many companies across the country that have decided to start off the new year with job cuts. According to recent data from WarnTracker.com, so far, over 31,000 employees have been laid off nationwide this year.
Starbucks CEO recently doubled down on a controversial policy
Starbucks’ corporate layoffs come after Niccol raised eyebrows during his first staff address in September by emphasizing to employees that working in person “more often than not” is vital to the company’s success.
“My point of view is we should be together as much as possible,” said Niccol in his address. “You need to figure out where you need to be to get your job done, then do that. We’re all adults here.”
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Starbucks’ return-to-office mandate, which was enforced in January 2023, requires corporate staff to work from the office three days a week, and that policy still stands.
“This is not a game of tracking. This is a game of winning,” said Niccol in his address. “I care about seeing everybody here succeed, and if success requires us being together more often than not, let’s be together more often.”
By October, Starbucks even reportedly began threatening its corporate employees with job termination if they failed to adhere to the company’s return-to-office mandate.
In a memo sent to employees in October, the company revealed that it plans to implement a “standardized process” that involves having workers face consequences that are “up to, including, separation” for not following the mandate.
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