Starbucks: Cutting staff in favor of automation has failed

Cutting staff in favor of automation has failed for Starbucks, according to chief executive Brian Niccol. The coffee giant is therefore planning to hire more baristas in its coffee shops and roll back on its use of automation.

Speaking in a call with investors last week, Niccol acknowledged that reducing the number of staff members in outlets has backfired and vowed to “fundamentally change” strategy amid worse-than-expected results for the first three months of the year.

“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,” Niccol said. “What we’re finding is that wasn’t an accurate assumption with what played out.”

Equipment doesn’t solve the customer experience

Niccol was brought into Starbucks last year and tasked with turning the business around as it struggles with rising prices and consumers cut back spending.

Niccol told investors: “Equipment doesn’t solve the customer experience that we need to provide, but rather staffing the stores and deploying with this technology behind it does.”

Niccol noted that taking on more staff would mean higher costs but said he was “banking on some growth to come with the investment.”

Along with increasing the number of baristas in its coffee shops, Starbucks will also scale back the rollout of its siren craft system, which is technology designed to help employees streamline the drinks-making process.

Why are businesses cutting staff in favor of automation

Starbucks’ changed stance comes as organizations continue to adopt artificial intelligence (AI) and automation – sometimes the expense of human workers.

A recent report from Staffing Industry Analysts (SIA) found that 14 percent of large staffing buyers have already replaced temporary workers with automation. Examples of roles being replaced by automation include manufacturing, administrative roles and repetitive tasks that bots can perform.

Last week, Duolingo revealed plans to stop using contractors to do work that AI can handle. The language learning company will become “AI-first” as part of a major rethink of how it manages working with contractors as well as its hiring and performance review processes.

The changes aim to help employees “focus on creative work and real problems,” CEO Luis von Ahn claimed.

Likewise, Google is now demanding that some remote employees return to the office, with their jobs in jeopardy if they don’t attend the office three days a week. The move comes as the company continues to downsize various teams to streamline operations and prioritize spending on AI and infrastructure.

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