Starbucks BioSnap a weekly updated Biography.
If you have been following Starbucks lately the buzz has hardly died down since CEO Brian Niccol announced a sweeping transformation that will shrink the company’s North American footprint by about 1 percent shuttering roughly 430 stores in the U.S. and Canada including at least 20 locations in Los Angeles alone according to USA Today ABC7 and The Street. Employees found out only days ago with some baristas reporting that they were notified just yesterday their store would pour its last latte as early as Saturday. The closures coincide with the elimination of 900 corporate non-retail jobs executives and support staff as Starbucks pursues what they are boldly calling their Back to Starbucks turnaround strategy. The plan includes a $1 billion restructuring approved by the board this week as detailed by Fortune and The Wall Street Journal to exit underperforming sites—especially pickup-only mobile order spots which were all the rage in recent years but failed to connect with core customers who craved the old coffeehouse vibe. The latest corporate memo suggests Starbucks wants to reclaim its place as the “third space” between home and work and insiders say company brass is rolling out a new design language across 1,000 stores aiming for warmth more seating extra power outlets and even complimentary refills.
The carnage is not just inside stores—900 office workers will be ousted with the company promising generous severance and extended benefits and staff at some closing locations offered transfers to surviving cafes. Executive reshuffling is top of mind as well CEO Niccol who joined from Chipotle a year ago has paired with new CFO Cathy Smith formerly of Nordstrom Walmart and Target whose mission is to bring zero-based budgeting and greater efficiency to the operation following two years of faltering sales. Speaking of which Starbucks reported a 2 percent decline in comparable North American store sales last quarter while rivals like Dutch Bros and 7 Brew are spiking double digits. Social media burned bright this week with both lament and praise—videos of closing store signs and farewell drinks mixed with union organizers vowing to bargain for the rights of every displaced store.
There is also a fresh class action lawsuit from three employees in Illinois and Colorado alleging Starbucks failed to reimburse them for costs tied to the new dress code just introduced across North America. These changes are massive even by Starbucks standards and could define the brand’s biographical arc for years with the shift away from rapid expansion to an all-in bet on rekindling the lost romance between barista and customer. Whether the bold pivot will be the jolt Starbucks needs or another short shot of corporate caffeine the world is watching.
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