Starbucks CEO Brian Niccol is urging employees to take more accountability and return to the office in the wake of major layoffs, according to the Wall Street Journal.
The executive said the company isn’t effective in how product gets to stores, making decisions, and holding each other responsible for those decisions. The message was relayed at an internal forum at Starbucks’ Seattle headquarters. Niccol at one point noted, “Make no mistake, we’re in a turnaround.”
“We have way too many follow-up meetings to fix way too many surprises,” said Niccol in the video obtained by the Journal. “We’ve got to stop it.”
The coffee giant is working on a “Back to Starbucks” plan to reverse negative same-store sales and traffic. Part of that is becoming a more versatile and adaptable company, which led to the laying off of 1,100 corporate employees and the elimination of hundreds of unfilled positions. Niccol said the layoffs were made to improve efficiency, not cut costs, according to the Journal. No further layoffs are planned.
The CEO also believes more people working in the office will help improve operations. The chain now mandates that those with VP roles and higher in North America work out of the Seattle and Toronto offices at least three days per week. Hiring for future director roles or below will require employees to be in Seattle or Toronto, except for enterprise designated remote positions. The Journal reported that 40 percent of North America employees work remotely.
At the heart of Starbucks’ comeback strategy is returning to a coffeehouse culture that emphasizes dining room amenities. For instance, store employees now serve beverages in a mug or glass for dine-in customers, display a condiment bar, and write messages on cups with Sharpie markers. The company also changed its code of conduct policy so that guests must place an order to stay in the dining room or use the bathroom.
Additionally, Starbucks is addressing mobile ordering challenges by revamping in-store operations and technology. Key efforts include deploying the “Siren System” to improve efficiency at high-volume stores, refining order sequencing to reduce congestion, and aiming for a four-minute service time. Staffing levels and training are being reformed to manage peak times better, and the brand introduced pricing changes, like eliminating surcharges for non-dairy milk, to attract customers. The goal is to balance speed with quality service and regain customer trust.
Another throughput solution is cutting the menu by 30 percent. Throughout the year, Starbucks will remove beverages that aren’t commonly purchased, can be difficult to make, or are too similar to other drinks on the menu. The chain remains dedicated to premium innovation, like Cortado and the new Iced Cherry Chai and Jalapeño Chicken pocket.
“We gotta untangle a few things right now,” Niccol said. “But you know what? It’s all things that we can untangle.”
Starbucks’ U.S. quick-service share recovered in Q1 following two quarters of declines. And it did so despite reducing the frequency of discount-driven offers—there were 40 percent fewer such transactions in the period, year-over-year. Through the quarter, the brand saw a shift in sales mix toward coffee and espresso-based beverages, which over-delivered and compensated for lower-than-expected performance across holiday promotions.
Same-store sales declined 4 percent (8 percent drop in traffic and 4 percent rise in ticket) in the North America and U.S., yet improved over the course of three months, and non-Starbucks Rewards traffic grew, quarter-over-quarter. Members and spend lifted versus Q4 and year-over-year, and price parity for non-dairy milk customizations brought back lapsed Rewards users.
