Starbucks announced a $1 billion restructuring plan, laying off 900 employees and closing some stores

To boost its brand image and improve its financial performance, Starbucks has announced a restructuring plan worth a total of 1 billion US dollars (1.3 billion Singapore dollars), which includes laying off 900 employees and closing some stores. This move indicates that Brian Niccol, the CEO of Starbucks, is vigorously promoting the global coffee chain to turn losses into profits.

Starbucks had approximately 360,000 employees as of last year. This reorganization will lead to a 1% reduction in the number of Starbucks stores in the United States and Canada, dropping to 18,300. After closing these stores, the company plans to focus on expanding its network of stores and renovating another 1,000.

According to a report by Bloomberg on Thursday (September 25th), after a business review, Starbucks found that some of its stores were not profitable and thus decided to close them. The company will focus on store layouts that align with Nicole's strategic direction in the future, and is committed to creating a more attractive and engaging customer experience to enhance overall business performance.

In a letter sent to employees on Thursday, Nicole said, "The initial results of the coffee shop's upgrade show that customers are visiting more frequently, staying longer, and sharing positive feedback."

However, this news had little impact on Starbucks' stock price. It fluctuated slightly in pre-market trading and closed down 8% on Wednesday, far below the 13% gain of the S&P 500 index.

Nicole took office as the CEO of Starbucks a year ago and is now trying to reverse the situation where same-store sales have declined for six consecutive quarters at Starbucks. This plan focuses on improving existing stores by adding seats and power sockets, encouraging customers to visit for a longer time, and enhancing customer engagement.

Despite these efforts and measures, they have not yet had a significant impact on Starbucks' financial performance, and this is already the second round of layoffs under Nicole's leadership.

The latest financial report shows that both Starbucks' sales and profits in the third quarter failed to meet expectations. The company is also facing increasingly fierce competition from small and medium-sized chain stores in the two major markets of Starbucks, the United States and China, which are providing customers with cheaper beverages at a faster speed.

To cope with the increasingly fierce competitive pressure, Starbucks is working on simplifying its menu to reduce the complexity of beverage production and shorten the waiting time for customers. Meanwhile, the company has also launched a series of new products to better cater to consumers' constantly changing taste preferences. As customers increasingly seek healthier options, Starbucks has added sugar-free options and launched protein-enriched beverages to meet the market's demand for healthier choices.

Although analysts and investors generally agree with the direction of these changes, they are also increasingly concerned about the cost and schedule of Nicole's plan. Due to Starbucks' investment in revitalizing the brand, its profitability deteriorated last quarter.