Starbucks has recognized that their strategy of reducing labor in favor of automation has not produced the expected benefits, particularly after disappointing Q2 earnings. CEO Brian Niccol acknowledged during an earnings call that the assumption automation would adequately offset the loss of staff was flawed. Even as the company opened more stores globally, total headcount decreased significantly over the past two years, leading to financial outcomes that fell short of expectations, including revenue growth of only 2 percent and a sharp decline in earnings per share.
Over the last couple of years, we've actually been removing labor from the stores, I think with the hope that equipment could offset the removal of the labor. And I think what we're finding is that was just - that wasn't an accurate assumption with what played out.
The plan for opening more stores while reducing staff relied on automation. At an investors' day in Sept. 2022, when the corp was still led by CEO Howard Schultz, COO John Culver highlighted three areas of focus for the business, including "leveraging automation" to simplify workers' tasks and to process orders more efficiently.
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