Starbucks is set to lay off 1,100 corporate employees globally as part of a sweeping restructuring initiative led by new Chairman and CEO Brian Niccol. The move, announced in a letter to employees on Monday, is aimed at streamlining operations, improving efficiency, and eliminating redundancies within the company's corporate structure.

The affected employees will be informed by mid-day Tuesday, with the company also eliminating several hundred unfilled positions as part of the restructuring. Niccol emphasized the need for Starbucks to operate with greater agility, increase accountability, and enhance integration across departments. However, the layoffs will not impact baristas at Starbucks locations or employees in roasting and warehouse operations.

Starbucks employs approximately 16,000 corporate support workers worldwide. In his letter, Niccol acknowledged that inefficiencies in the company’s structure—such as excessive management layers, redundant roles, and small team managers—have slowed down decision-making processes.

“Our size and structure can slow us down,” Niccol stated. “Too many layers, managers of small teams, and roles focused primarily on coordinating work have contributed to inefficiency.”

Niccol, who took the helm last fall, has been tasked with revitalizing the global coffee giant following a period of declining sales. Starbucks' global same-store sales dropped by 2% in the fiscal year ending September 29, 2024, reflecting a challenging business environment. In the U.S., rising prices and longer wait times have discouraged customers, while in China, growing competition from cheaper coffee chains has intensified pressure on the brand.

As part of his broader turnaround strategy, Niccol is focusing on improving service times, particularly during the crucial morning rush, when long wait times have led to customer dissatisfaction. Additionally, he aims to restore Starbucks locations as community hubs, reinforcing their role as gathering spaces rather than mere transactional outlets.

The company is also streamlining its menu and refining its ordering algorithms to enhance efficiency across mobile, drive-thru, and in-store transactions. By optimizing operations and reducing complexity, Starbucks hopes to regain its competitive edge in a rapidly evolving market.

Despite the significant workforce reductions, Starbucks shares remained relatively stable in premarket trading on Monday. Investors appear to be taking a wait-and-see approach as Niccol implements these structural changes to position the company for long-term growth.

While the layoffs are expected to reduce operational bottlenecks and enhance efficiency, they also raise concerns about morale among remaining employees. Corporate restructuring efforts often lead to uncertainty, and Starbucks will need to carefully manage internal communications and expectations to maintain employee engagement during this transition.

As Starbucks moves forward with its restructuring plans, the company’s ability to balance efficiency with its brand identity as a customer-centric, community-driven business will be key. With growing competition and shifting consumer preferences, Niccol’s leadership will be crucial in navigating these challenges and steering Starbucks back to sustainable growth.