Starbucks Opts For Reshuffle (SBUX)

February 21, 2008 by Douglas A. McIntyre

Starbucks (NASDAQ: SBUX) is making some changes today in what it hopes will streamline certain aspects of its operations.  The press release notes that this will "better focus efforts on enhancing the customer experience," but as always follow the money.

Howard Schultz has sent a letter to "all partners" of Starbucks to outline key strategic customer initiatives.  A change it has already set in motion is an end to warm sandwiches in the mornings to go back to its core.  Schultz said this is his most difficult communication date and the company must analyze and review every part of its operations.

For starters, 600 "positions and partners": "This total includes the elimination of existing positions and open headcount, as well as the reduction of our current workforce. Within this context, approximately 220 partners have separated from the company. Nearly all were U.S. partners serving in non-retail support roles." In short, some middle managers are going, as are some vendors and suppliers.

In field operations, is two U.S. divisions will become four: Western/Pacific, Northwest/Mountain, Southeast/Plains and Northeast/Atlantic.  It is also reorganizing and consolidating support functions for U.S. store development, licensed stores, finance, partner resources, marketing, in-store experience, supply chain, communications, and protection.  It is also making partner care and support changes. 

If you have ever followed a reorganization and redirection of efforts after a founder returns, this sounds just like the second step of a ten step process.  For better or worse, more changes are coming.

Jon C. Ogg
February 21, 2008