Business | Economy
Starbucks slashes 600 jobs in effort to reduce costs
Starbucks Corp. has laid off about 220 support staff who worked at the coffee retailer's headquarters and in field operations, and will leave about 380 open jobs unfilled.
- AP
- Published: 01:05 February 23, 2008
Seattle: Starbucks Corp. has laid off about 220 support staff who worked at the coffee retailer's headquarters and in field operations, and will leave about 380 open jobs unfilled.
Chairman and chief executive Howard Schultz announced the 600 job cuts late on Thursday in an e-mail to Starbucks' more than 170,000 employees, calling it a difficult decision aimed at sharpening the company's focus on customers.
"We realise that we are operating in an intensely challenging environment, one in which our customers and [employees] have extremely high expectations of Starbucks," Schultz wrote. "And we have to step up to the challenge of being strategic as well as nimble as our business evolves. Unfortunately, we have not been organised in a manner that allowed us to have a laser focus on the customer."
The vast majority of laid-off employees worked in the US - about one-third at the company's Seattle headquarters and the rest in regional field offices. Support staff include people who work on marketing, finance, human resources, communications and supply chain management.
Relief
None of the cuts include baristas or store managers, and none of the jobs being left open include store employees or district managers who oversee store operations, the company said.
Starbucks, which has been struggling amid a faltering economy, its own rapid growth and increased competition from cheaper rivals, also said it will replace its East and West divisions with four new ones: Western/Pacific, Northwest/Mountain, Southeast/Plains and Northeast/Atlantic.
The moves are the latest in a series of changes at Starbucks since it fired its previous CEO, Jim Donald, and gave the job back to Schultz in early January.
Starbucks will open hundreds fewer US stores this year than initially planned, is closing about 100 poorly performing domestic stores and ramping up its expansion overseas.
David Palmer, an analyst with UBS Equity Research, called the layoffs a visible step toward removing bureaucracy and lowering costs. "We believe that Starbucks margins are set to expand as it slows unit growth and minimises overhead," Palmer wrote in a research note.
Starbucks recently announced that it will quit selling warm breakfast sandwiches by this fall, in part because the items on the menu competed with the coffee aroma in stores.
Last week, Starbucks unveiled plans to start offering limited free wireless internet service for the first time, ending a six-year partnership with T-Mobile - which only offered a paid subscription service - and switching to AT&T Inc.
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