Gee Scott: Starbucks layoffs could signal trouble brewing for the economy

Starbucks plans to lay off 1,100 corporate employees globally as new Chairman and CEO Brian Niccol streamlines operations.

In a letter to employees released Monday, Niccol said the company will inform employees who are being laid off by mid-day Tuesday. Niccol said Starbucks is also eliminating several hundred open and unfilled positions.

“Our intent is to operate more efficiently, increase accountability, reduce complexity and drive better integration,” Niccol wrote in the letter.

Is Starbucks bracing for slowing economy?

Starbucks has 16,000 corporate support employees worldwide, but that includes some employees who aren’t impacted, like roasting and warehouse staff. Baristas in the company’s stores are not included in the layoffs.

“We don’t know how many will lose their jobs here, but you know that there will be some type of impact,” host Gee Scott said on Seattle’s Morning News. “I think there’s a lot of companies that are preparing maybe for if the economy does fumble up a little bit coming up. So, a lot of companies are bracing for that. The same way some of you, personally, with your families, are buckling up and kind of bracing for if the economy kind of falls a little bit like I think there’s a lot of people that are tightening their belt if you will.”

Gee said that he was glad none of the cuts would be the baristas.

‘Our size and structure can slow us down’

Niccol said in January that corporate layoffs would be announced by early March. He said all work must be overseen by someone who can make decisions while the the Seattle coffee giant reduces the complexity of its structure and eliminates silos within the company that slow communication.

“Our size and structure can slow us down, with too many layers, managers of small teams and roles focused primarily on coordinating work,” Niccol wrote.

Starbucks hired Niccol last fall to turn around sluggish sales. He has said he wants to improve service times — especially during the morning rush — and reestablish stores as community gathering places.

Niccol is also cutting items from Starbucks’ menu and experimenting with its ordering algorithms to better handle its mix of mobile, drive-thru and in-store orders.

Listen to the full discussion on Starbucks with Gee Scott on Seattle’s Morning News