Starbucks layoffs aim to fix margins so CEO Niccol can ‘play offense’
Starbucks is making the tough yet necessary call to cut deeper into its workforce to achieve the next leg of its turnaround: improving the bottom line. The coffee chain said it will eliminate 300 U.S. corporate jobs and close several regional corporate offices as part of a broader restructuring tied to its $2 billion cost savings plan. It’s the latest move in the company’s turnaround, called “Back to Starbucks,” under CEO Brian Niccol, who joined in September 2024 with a mandate to regain some of the global brand’s lost momentum. This move is Niccol “trying to get the margins right,” Jim Cramer said on “Squawk on the Street” Friday. “Once he gets the margins right, then he can play offense.” The cuts aren’t a total surprise: It marks Starbucks’ third round of layoffs under Niccol, reinforcing a consistent message from management that the company needs to right-size its cost structure after years of underperformance. In February 2025, Niccol said that the company would cut 1,100 jobs and not fill several hundred other open positions. Months later, it announced another 900 cuts for its nonretail workers as part of a $1 billion restructuring plan . “He [Niccol] has said over and over again that he’s got to right-size,” Jim said. “This is it. He’s getting it done.” Jim added. Starbucks said the latest restructuring will result in about $400 million in charges, including a $280 million write-down because some of its long-term assets (buildings, equipment) are now less valuable, and $120 million in cash charges tied to severance pay. Most of the plan’s actions will be completed by the end of fiscal 2026. “We are taking further action under the Back to Starbucks strategy, building on our strong business momentum and working to return the company to durable, profitable growth,” a Starbucks spokesperson said in a statement to CNBC. “Leaders have taken a hard look at their respective functions to further sharpen focus, prioritize work, reduce complexity, and lower costs.” Shares of Starbucks popped 1.5% on Friday, giving investors a boost of reassurance that CEO Brian Niccol is sticking to his word about tackling the next phase of the turnaround. The first phase focused on reigniting comparable sales, which have been trending upward. Starbucks’ turnaround has taken longer than some investors initially anticipated, but “people are willing to give him the time,” Jim said, given the complexity of Starbucks’ multifaceted global business. “That’s why you see the stock go up.” Shares of Starbucks are up more than 9% over the past month and have returned 28% year to date. During Friday’s Morning Meeting for Club members, Jim said he had a chance to speak with Starbucks CEO Brian Niccol earlier this morning, who told him the move is business as usual. The layoffs come a day after TD Cowen upgraded Starbucks’ stock. The firm expressed confidence in the pace of the turnaround and noted that Starbucks’ leadership team is striking the right balance between investing to rebuild the brand and offsetting those costs through corporate layoffs. The bottom line: Starbucks’ turnaround now hinges on whether profits can improve. This layoff announcement is a cost-saving opportunity that should continue to shift the narrative from skepticism to optimism that Niccol has a solid handle on bringing Starbucks back. We maintain our $115 price target on the stock and keep our rating at 2 , meaning we’ll wait for a pullback before buying more.
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