Starbucks will be outsourcing some technology work after cutting 1,100 jobs across its corporate ranks to increase efficiency and reduce complexity amid the Seattle-based chain’s sales slump, Starbucks’ CEO Brian Niccol said.
According to Bloomberg, the coffee chain started laying off workers on Monday, Feb 24, and will now turn to third-party tech workers for certain tasks.
Mr Niccol, who took over in September, announced the restructuring in January. About 7% of Starbucks’s corporate workforce was affected, but the cuts did not include workers in the company’s cafes, warehouses, manufacturing, distribution, or roasting operations.
Affected workers were notified by e-mail and then connected with human resources to discuss severance pay, benefits, and career support. Starbucks said they would continue receiving pay and benefits until May 2.
In a memo seen by Bloomberg News, chief technology officer Deb Hall Lefevre said the company is realigning its mix of internal and outsourced talent. The goal is to shift full-time employees to key projects while using external service providers for “speed and agility” on more routine work, the memo stated.
Starbucks has not specified how many roles will be outsourced or which third-party provider will handle the work. However, the company confirmed it will still have a significant in-house tech team.
A broader reorganisation of the tech team will also affect data and analytics, engineering, and other technology functions, according to the memo. Several hundred open but unfilled corporate positions will also be closed as part of the changes.
Meanwhile, corporate employees were told to work remotely for the week following the layoffs.
Starbucks’ sales slump affected Berjaya Food, which operates Starbucks outlets in Malaysia. The company reported its fifth consecutive quarterly loss after boycotts of US fast food brands that started last year in protest of America’s support for Israel’s military actions in Gaza.
Berjaya Food posted a net loss of RM70.3 million (S$21.3 million) for the six months ending in December.
On Friday, Feb 21, its shares dropped 2.9% to its lowest level since Nov 19. The company had 408 Starbucks cafes in Malaysia as of June 2024 but does not disclose revenue figures for its Starbucks segment separately.
Malaysiakini reported that in January, Berjaya founder Vincent Tan said there was no reason to continue boycotting Starbucks after the Gaza ceasefire. He stated that the boycott does not affect Israel.
During Mr Niccol’s first visit to the Middle East since becoming CEO, he said the boycotts were “not based on anything that’s accurate or true,” stressing that Starbucks had “never supported any militaries.”/TISG
Read also: Starbucks cuts US retail workforce by 8% despite opening over 500 stores
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