Starbucks CEO has a tough message for employees after layoffs | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Starbucks (SBUX) CEO Brian Niccol, former CEO of Chipotle, is doubling down on his efforts to revamp the coffee chain as it struggles to attract customers back into its stores.

Over the past year, Starbucks’ sales have struggled amid recent menu price increases and a consumer boycott over alleged political alliances in the Gaza war.

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In its latest earnings report, Starbucks revealed that during the last few months of 2024, its comparable store sales in the U.S. dipped by 4% year-over-year, and its comparable transactions also declined by 8%.

Starbucks’ U.S. operating income, which is the company’s profit after expenses, also decreased by 22% year-over-year.

Since the recent decline in sales, Starbucks laid off 1,100 corporate employees worldwide last month and paused hiring for hundreds of open job positions.

“We are simplifying our structure, removing layers and duplication and creating smaller, more nimble teams,” said Niccol in a memo to employees on Feb. 24. “Our intent is to operate more efficiently, increase accountability, reduce complexity and drive better integration.”

Starbucks CEO gives employees a rude awakening

After announcing the harsh decision, Niccol is now making it very clear to employees that he wants to see them step up their game at the company.

According to a new report from the Wall Street Journal, Niccol told employees during an internal forum at Starbucks’ headquarters that they need to change the way they make decisions.

Augusta, Georgia, Starbucks Coffee, Baristas at work making drinks.

Jeff Greenberg/Getty Images

“We’re not effective on how things get to the store, and we’re not effective in making decisions and then holding each other accountable to those decisions,” said Niccol. “This is why we had to make the changes that we had to make.”

He also said that the company’s recent layoffs weren’t due to cost-cutting and that stores needs to show improvement to prevent future job cuts.

“We own whether or not this place grows,” said Niccol.

Niccol also emphasized that the company needs to be more diligent in addressing customer complaints, which can range from slow service to a lack of functioning electrical outlets in stores.

“We have way too many follow-up meetings to fix way too many surprises,” said Niccol. “We’ve got to stop it.”

Starbucks has been ramping up efforts to win back customers

Niccol’s recent message to employees comes after he launched his “Back to Starbucks” plan in September last year, which aims to reestablish Starbucks as a community coffeehouse.

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“A visit to Starbucks is about connection and joy, and of course, great coffee. Many of our customers still experience this magic every day, but in some places — especially in the U.S. — we aren’t always delivering,” wrote Niccol in a Sept. 10 letter announcing the plan. “It can feel transactional, menus can feel overwhelming, product is inconsistent, the wait too long or the handoff too hectic. These moments are opportunities for us to do better.”

Since then, Starbucks has rolled out a plethora of changes to win back customers such as cutting down its menu, pausing price increases and shortening wait times for orders to four minutes or less.

The coffee chain also recently reintroduced condiment coffee bars in its stores. It even nixed the upcharge for nondairy milk customizations and began prioritizing serving coffee in ceramic mugs for customers who choose to enjoy their beverages inside stores.