Starbucks throttles operations at US coffee plants to curb costs

[CHICAGO] The Starbucks plants that roast and package the company’s coffee beans in the US are cutting two days of weekly production as part of management’s efforts to cut costs.

The five plants, located in Georgia, South Carolina, Pennsylvania, Nevada and Washington state, will adopt the new five-day schedule in January, according to sources familiar with the matter who asked not to be named discussing the company’s operations.

Starbucks, which is looking to cut costs in some areas to help pay for upgrades elsewhere, found it no longer needs to operate the plants seven days a week to meet current demand, one of the sources said. The plants run 24 hours a day.

The facilities produce coffee for the chain’s own stores as well as some of the packaged coffee sold under the Starbucks brand at grocery stores and other retailers. The company does not disclose the number of workers in the plants.

Starbucks declined to comment.

The company does most of its own coffee purchasing, roasting, packaging and distribution, according to its annual report. The plant in Augusta, Georgia, for example, makes almost all the Frappuccino powder that the company uses around the world. It also produces the bulk of the Starbucks’ blonde espresso roast, according to the company’s website.

Starbucks is working to bounce back from six straight quarters of same-store sales declines. Chief executive officer Brian Niccol’s plan is to bring more customers into the company’s cafes by making them more inviting. So locations are getting upgraded decor along with more seats and power outlets.

The menu is also getting an overhaul, and management is trying to reduce wait times and improve customer service.

Chief financial officer Cathy Smith has said that the company needs to manage spending to fund the initiatives, which include US$500 million towards adding staff to stores. To compensate, Starbucks has asked executives to rein in spending and is offering US$6 million stock grants payable only if the company meets a goal to cut operating expenses.

“To offset these investments, we are focusing on driving a healthier and more efficient cost structure,” Smith said in the company’s July earnings call.

Analysts expect Starbucks’ same-store sales to rise slightly in the current quarter, though they have scaled back their expectations in recent weeks.

The restaurant industry is muddling through a difficult environment as consumer sentiment sways in response to US President Donald Trump’s abrupt changes in trade policy. Americans also expect inflation to pick up and job growth has slowed significantly, pointing to cracks in the economy.

Manufacturing plants

In addition to its US plants, Starbucks also has roasting, manufacturing and distribution facilities in the Netherlands, India and China. The company says it buys 3 per cent of the world’s coffee each year to supply its business, which encompasses more than 41,000 company-run and partner-operated stores worldwide.

Nestle has a license to sell Starbucks-branded packaged coffee in supermarkets and other locations. Nestle in some cases roasts coffee for these items and packages them, according to Starbucks’ annual report.

Starbucks employed 211,000 people in the US as at September 2024, with more than 95 per cent of that total working in its stores. The rest worked in corporate offices and in teams in charge of building stores, as well as in manufacturing, warehousing and distribution operations.

The company earlier this year laid off about 1,100 office workers. The cuts did not affect the plants or its cafes. BLOOMBERG