In a significant move, Starbucks presented its laid-off baristas with a severance package just days after announcing a series of sweeping layoffs and the closure of numerous store locations. On Thursday, the renowned Seattle-based coffee giant revealed plans to close approximately 1% of its stores across North America, which translates to over 100 locations. Among those slated for closure is the iconic Capitol Hill Roastery in Seattle.
The recent layoffs are not limited to retail staff impacted by the store closures. Starbucks also disclosed that around 900 non-retail employees would be laid off as part of this restructuring effort. On Sunday, the company sent documents outlining its severance package to affected retail employees, which were reviewed by Business Insider. According to a document titled Severance Summary, laid-off baristas are entitled to 60 hours of pay, while shift supervisors will receive 84 hours of pay.
Starbucks baristas typically earn between $15 and $22 an hour, depending on the store's location across the United States, as indicated by job listings on the Starbucks careers website. Shift managers earn approximately $20 to $29 hourly, making these severance packages a crucial financial support for those affected.
Entry-level café attendants, responsible for maintaining the cleanliness and organization of the cafés, will be entitled to 30 hours of pay upon their layoff, as detailed in the severance document. Notably, severance pay is not a legal requirement for hourly workers in most states. Additionally, laid-off retail staff can claim a lump sum payment equivalent to three months of their health insurance premiums. This coverage will extend for three months from the end of October, aligning with the provisions of the Department of Labor's COBRA Act.
Employees will have 45 days to decide whether to sign a release agreement in exchange for their severance pay. This timeframe allows affected staff to carefully consider their options during this transition period.
In a separate document titled Partner Separation FAQ — U.S. Retail Stores, also reviewed by Business Insider, Starbucks indicated that employees in nine states would receive payment for their accrued vacation hours. However, employees with granted but unused vacation hours will not receive compensation for that time.
In response to inquiries regarding the layoffs, Starbucks directed Business Insider to an open letter from CEO Brian Niccol, issued on Thursday. In the letter, Niccol emphasized the company's commitment to providing transfer opportunities to nearby locations and swiftly assisting partners in understanding available opportunities. "For those we can't immediately place, we're focused on partner care, including comprehensive severance packages," Niccol stated.
In an SEC filing dated September 23, Starbucks projected that it would incur a staggering $1 billion expense due to these store closures, with approximately $150 million of that cost linked to employee separation benefits. These store closures are part of Niccol's Back to Starbucks turnaround plan, aimed at revitalizing the brand after experiencing several quarters of declining sales.
As part of this strategic assessment, Starbucks has evaluated the financial performance and customer experience of its stores, leading to the decision to close those that did not meet specific criteria. As a result of these changes, Starbucks' stock price has experienced a downturn, falling more than 14% over the past year.
