By Heather Haddon

Starbucks Chief Executive Officer Brian Niccol is delivering a tough-love message to corporate workers: Step it up, get back in the office and take responsibility for improving the company's performance.

In his first address to employees since announcing widespread layoffs last month, Niccol said Tuesday that Starbucks needed to reorganize to make leaders more accountable for financial and operational improvements.

"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," Niccol said in the internal forum at the chain's Seattle headquarters, a replay of which was viewed by The Wall Street Journal. "This is why we had to make the changes that we had to make."

The world's largest coffee chain is cutting 1,100 corporate workers globally as it seeks to turn around its business. Starbucks's same-store sales have fallen for four consecutive quarters as customers have opted for faster or cheaper alternatives.

Niccol said Tuesday he was optimistic about moving Starbucks forward, the work ahead and improving cafes for baristas and customers. He is set to address Starbucks investors next Wednesday at his first shareholder meeting since he took over last September.

Niccol arrived at Starbucks with a mandate for change. He said Tuesday that the chain's U.S. stores are starting to improve through measures such as bringing back self-service condiment bars and ceramic cups.

But some of those moves were low-hanging fruit, he said, and the company needs to transform its corporate operations to succeed more broadly.

"Make no mistake, we're in a turnaround," Niccol said.

Starbucks said last week in a letter to Washington state that 612 of the positions eliminated represented workers based in the company's Seattle headquarters, or remote employees who reported there.

Niccol said the recent job cuts weren't focused on cutting costs. He said he currently had no plans for additional layoffs, though the string of quarterly sales declines show the company's need to improve to prevent future cuts.

Getting more employees working in Starbucks's U.S. and Canada offices will help improve functions, he said. About 40% of the company's North American corporate employees work remotely, the company said.

"We gotta untangle a few things right now," he said. "But you know what? It's all things that we can untangle."

Starbucks is striving to win back business as consumers' financial stresses deepen, which adds another challenge for the company, Niccol said. Starbucks needs to be more judicious in the initiatives it rolls out to cafes to better serve customers and get them to return, he said.

Even small things in cafes need more attention, like ensuring cafes' electrical outlets are functioning so customers can linger and work, Niccol said. The company also needs to do a better job listening and acting on consumer complaints, ranging from furniture to drinks piling up on counters, he said.

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

The company plans to formalize its new leadership structures in meetings later this month.

Write to Heather Haddon at heather.haddon@wsj.com

(END) Dow Jones Newswires

March 05, 2025 15:10 ET (20:10 GMT)

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