Starbucks' Severance Details for Employees from Closing Stores

Starbucks recently unveiled a severance package for its employees who are being let go following the announcement of extensive layoffs and the closure of numerous stores.

In a shake-up affecting around 1% of its North American outlets, the prominent coffee chain is shutting down over 100 locations. Included in these closures is the well-known Capitol Hill Roastery in Seattle — a flagship store of the brand.

Beyond the retail division, the closures also impact 900 non-store personnel who are losing their jobs. Documents detailing the severance offerings have been shared with the affected retail workers, as confirmed by Business Insider.

The ‘Severance Summary’ document outlines that baristas and shift leaders will receive financial compensation of 60 hours and 84 hours, respectively. This compensation depends on their current hourly wages.

For instance, baristas earn between $15 and $22 per hour, reflecting different store locations throughout the United States. Meanwhile, shift supervisors typically see an hourly rate from $20 to $29.

Entry-level café attendants, responsible for keeping shops in order, are promised a payout equivalent to 30 working hours as part of their severance.

Generally, U.S. state laws do not mandate companies to provide severance to hourly-paid staff.

Additionally, the laid-off retail team can expect a one-time sum covering the cost of three months' worth of their health insurance premiums, with coverage extending three months post-October's end as outlined by the Department of Labor’s COBRA Act.

Employees are given a 45-day period to deliberate on signing a release agreement in return for the offered severance package.

Further Information

Another document called ‘Partner Separation FAQ — U.S. Retail Stores’ specifies that in nine states, employees will receive compensation for their accumulated vacation time. However, unused vacation hours will not be compensated.

In response to media inquiries, Starbucks directed attention to a public letter from CEO Brian Niccol, released earlier. Niccol highlighted efforts to reassign employees to nearby Starbucks locations where possible and provided assurance about thorough severance packages for those who cannot be immediately relocated.

An SEC filing dated September 23 revealed that Starbucks anticipates a financial impact of $1 billion resulting from the closures, with $150 million attributed to employee separation costs.

These closures are a segment of Niccol’s strategic 'Back to Starbucks' initiative, which seeks to rejuvenate the business following a succession of quarters recording low sales figures.

Based on a detailed assessment of store performance and customer feedback, Starbucks decided to shut down stores falling short of essential operational benchmarks.

The company’s stock has decreased by over 14% within the last year, reflecting these operational challenges.