Starbucks is implementing significant changes to address declining sales, including laying off over 1,000 corporate employees and streamlining its menu.
The coffee chain announced Monday that it will eliminate several complex and less popular menu items, such as certain Frappuccino blended drinks, the Royal English Breakfast Latte, and White Hot Chocolate. The company stated that these beverages are either rarely purchased, difficult to prepare, or too similar to existing offerings.
As part of its efforts to simplify operations, Starbucks is reducing its menu by 30%. Some items, including iced energy drinks and the controversial olive oil coffees, have already been removed. The move aligns with an industry trend of narrowing choices to reduce costs and focus on top-selling, profitable items.
Addressing Declining Sales and Workplace Challenges
Starbucks has experienced four consecutive quarters of declining sales, its longest slump in years. High drink prices and long wait times have contributed to the downturn, with some customers opting for alternatives. Additionally, hundreds of Starbucks locations have voted to unionize, citing concerns over wages, benefits, and working conditions.
The company has also seen a surge in mobile orders, which now account for over 30% of transactions. While convenient for customers, the increase in mobile orders has put additional strain on workers during peak hours.
Workforce Reduction and Office Return Policies
In addition to layoffs, Starbucks will eliminate “several hundred” open and unfilled positions. The company is also adjusting its workplace policies, requiring vice presidents and higher-level executives to be present at its Seattle or Toronto offices at least three times a week.
New Leadership and Turnaround Strategy
Starbucks is undergoing these changes under the leadership of Brian Niccol, the company’s fourth CEO in two years. Niccol, who joined from Chipotle in August 2024, has built a reputation as a turnaround expert in the industry.
Niccol has emphasized the need to refocus Starbucks on its roots as a “community coffeehouse,” prioritizing comfortable seating and an inviting atmosphere rather than prioritizing quick mobile transactions. He has also reinstated company traditions such as baristas doodling on cups and self-serve milk and sugar stations.
With these strategic adjustments, Starbucks aims to restore its brand identity, improve customer experience, and drive business growth.
