Starbucks cuts US retail workforce by 8% despite opening over 500 stores

Starbucks reportedly cut its retail workforce in the United States by 8% over the past year, even as it continues to open new stores. According to a regulatory filing on Nov 20, the company’s US headcount dropped to 211,000 as of Sept 29, 2024, down from 228,000 a year earlier.

According to Bloomberg, the majority of the cuts were in Starbucks’ cafes, where staff levels fell from 219,000 to 201,000. This marks the second consecutive year of staff reductions in the US, despite the company adding 513 new company-operated stores. Starbucks now has 10,158 stores across the country.

The company is facing scrutiny after a drop in sales, which led to the sudden departure of CEO Laxman Narasimhan. He was replaced by industry veteran Brian Niccol, who is now focused on turning the company around. Mr Niccol’s plan includes simplifying the menu and making stores more inviting by adding more comfortable seating.

Employee staffing levels have been a key issue. An internal survey from April 2024 showed that workers were unhappy with the number of staff in stores, calling it a “skeleton staff.” This often led to backlogs in orders.

Starbucks responded by saying it has increased the hours worked by employees, which helps them earn more while keeping their benefits. The company has also adjusted staffing to better match the needs of each store.

Over 3,500 stores have received more labour hours over the past year. Mr Niccol has pledged to give baristas the “tools and time” they need to do their jobs.

Unionised workers at Starbucks are also on the rise. The percentage of unionised workers grew from 3.6% to 5% by the end of the fiscal year. 

Earlier this year, Starbucks and its union began discussions on reaching collective-bargaining agreements and improving the union organising, aiming to resolve the deadlock. Mr Niccol has stated his commitment to negotiating in good faith.

Starbucks is also dealing with pressure from activist investors. In its filing, the company said shareholder actions have increased costs, disrupted its strategy, and could hurt its stock price.

Elliott Investment Management, a major shareholder, has called for a review of Starbucks’ business in China. The Strategic Organizing Center, which advises union pension funds, has also pushed for changes at the company. /TISG

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