Starbucks will scale back its automation plans and hire thousands of baristas in a significant shift aimed at winning back customers, CEO Brian Niccol announced Tuesday, as the coffee chain grapples with falling sales and a challenging consumer environment.
Niccol, who took the helm of Starbucks in September 2024, acknowledged that previous efforts to cut labor costs by leaning heavily on technology had fallen short.
“Over the last couple of years, we’ve actually been removing labor from the stores,” he told investors on a call.
“I think with the hope that equipment could offset the removal of the labor. What we’re finding is… that wasn’t an accurate assumption with what played out.”
The decision to increase staffing follows pilot tests in a limited number of stores shortly after Niccol joined.
Now, the company plans to expand that approach to roughly 3,000 locations this year.
The move marks a notable reversal in strategy at a time when many in the food and beverage industry are accelerating the use of automation to reduce costs.
Starbucks will also pull back on the rollout of its Siren Craft System — a suite of high-tech drink-making tools introduced in 2022 and named after the company’s iconic siren logo.
The system was designed to streamline operations, but its effectiveness in improving store efficiency has come into question.
While Niccol acknowledged that boosting staffing levels would result in higher costs, he expressed confidence in the long-term benefits.
“I’m banking on some growth to come with the investment,” he said.
The hiring spree comes alongside broader efforts to rejuvenate the brand, including store redesigns, menu updates and tweaks to employee dress codes.
Earlier this month, Starbucks unveiled a new uniform guideline requiring baristas to wear dark, solid-colored shirts to better highlight the company’s trademark green apron and enhance brand familiarity.
In January, Starbucks reversed a six-year-old policy that allowed non-paying customers to use its cafes and facilities in North America.
The original rule, which had been widely seen as a step toward inclusivity, has now been rolled back as part of the company’s strategy to focus more on its core paying clientele.
Despite the sweeping changes, early results from Niccol’s turnaround plan have been underwhelming.
The company reported a 1% drop in global sales for the quarter ending March 31, marking its fifth consecutive quarterly decline.
US performance remained weak, though sales in China and Canada showed modest gains.
Following the earnings announcement, Starbucks shares tumbled more than 6.5% in after-hours trading as investors responded to the disappointing results and uncertain path forward.
Niccol, who was previously CEO of Taco Bell and Chipotle, was brought in to reinvigorate Starbucks amid mounting economic pressures and shifting consumer habits.
