Starbucks is launching a major restructuring initiative aimed at revitalizing the company, as CEO Brian Niccol employs strategies reminiscent of his successful tenure at Chipotle. On Thursday, the coffee giant announced a second round of layoffs this year alongside several store closures across North America, all part of Niccol’s “Back to Starbucks” initiative.
Niccol, who previously led Chipotle from 2018 to 2024, is no stranger to corporate turnaround strategies. During his time at Chipotle, he oversaw a significant recovery after the company was marred by an E. coli scandal, which had severely impacted public confidence and resulted in a drop in share prices. Under his leadership, Chipotle’s sales saw considerable growth, with share prices increasing from around $6 to approximately $56 during his tenure. Investors expressed optimism that Niccol could replicate this success at Starbucks, a much larger operation.
At Chipotle, Niccol implemented a series of layoffs and corporate restructuring measures, shutting down underperforming locations, implementing new technologies, and improving customer experiences. He emphasized streamlining operations and ensuring food safety, which involved enhancing employee training and introducing drive-thru lanes for online orders.
Since taking charge at Starbucks in September 2024, Niccol has already initiated significant changes, including cutting 30% of the menu and introducing a new mobile ordering system aimed at reducing wait times to under four minutes. He has reinstated ceramic mugs for hot drinks, reintroduced self-serve condiment bars, and mandated that baristas add personalized notes on to-go cups to improve the overall customer experience.
However, the transition at Starbucks has encountered obstacles. While Niccol has maintained staff continuity from Chipotle—bringing in several former executives from his previous roles—Starbucks operates on a much larger scale with over 40,000 locations worldwide. The challenges of coordinating changes across such an extensive footprint are more complex than those Niccol faced at Chipotle or Taco Bell.
Investor enthusiasm for Niccol’s appointment initially drove Starbucks shares up by 25%, but the stock has since declined by more than 10%, falling behind the broader market. Experts have noted that Starbucks faces longer-term issues compared to the one-time challenges that plagued Chipotle, such as health crises and operational mishaps.
As Niccol implements changes, he has been careful to balance layoffs and store closures with the need to maintain morale among employees, especially after significant cuts earlier this year. There have been protests from both corporate and retail staff against certain decisions, including workplace mandates and changes in dress codes.
Leadership observers suggest that Niccol’s biggest challenge may lie in infusing a forward-looking vision into Starbucks culture. Previous CEO Howard Schultz’s ideals might differ from current customer expectations. The ongoing transition requires decisive yet sensitive leadership, as the company seeks to redefine its identity in the evolving coffee market, facing competition from new entrants such as China’s Luckin Coffee.
Going forward, industry analysts emphasize that Niccol must prioritize long-term outcomes over short-term jitters. The journey to restore and enhance the Starbucks brand will demand patience, resilience, and thoughtful decision-making amid a rapidly changing business landscape.
