Starbucks is making a big change in its business strategy. The coffee chain plans to hire thousands of baristas and scale back its automation efforts. This shift comes as the company faces declining sales and tough market conditions. CEO Brian Niccol announced these changes on Tuesday, highlighting the need to reconnect with customers.
Niccol, who took over as CEO in September 2024, admitted that previous attempts to reduce labor costs by relying on technology did not work as expected. He noted that the company had been cutting back on staff in stores, believing that machines could fill the gap. However, this strategy did not yield the results they hoped for.
To address these challenges, Starbucks will increase its staffing levels, even though this means higher costs. Niccol is optimistic about the long-term benefits of investing in more employees. He believes that this move will help the company grow and improve customer satisfaction.
Starbucks plans to expand its hiring initiative to about 3,000 locations this year, following successful pilot tests in a few stores. The company is also pulling back on the rollout of its high-tech drink-making system, known as the Siren Craft System, which was introduced in 2022 but has not proven effective in boosting efficiency.
Alongside these staffing changes, Starbucks is focusing on refreshing its brand. This includes redesigning stores, updating the menu, and changing employee dress codes to better showcase the brand’s identity. Recently, the company introduced a new uniform guideline requiring baristas to wear dark, solid-colored shirts.
In addition, Starbucks has reversed a policy that allowed non-paying customers to use its cafes in North America. This decision aims to refocus on paying customers and enhance the overall experience for them.
Despite these efforts, early results from Niccol’s turnaround plan have not been promising. The company reported a 1% drop in global sales for the quarter ending March 31, marking its fifth consecutive quarterly decline. While sales in China and Canada showed some improvement, the U.S. market remains weak. Following the earnings report, Starbucks shares fell over 6.5% in after-hours trading due to investor concerns about the company’s future.
Niccol, who previously led Taco Bell and Chipotle, was brought in to revitalize Starbucks amid changing consumer habits and economic pressures. The upcoming changes reflect a significant shift in the company’s approach as it seeks to regain its footing in a competitive market.