When considering cutting costs, many companies might avoid awarding massive payouts to multiple employees.
In Starbucks' case, a sense of urgency has driven the company to offer huge incentives to its executive team, after baristas have spent months fighting for better pay.
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The coffee giant has suffered a troublesome slump, with store sales falling 2% in the second quarter of 2025, marking the fifth consecutive quarterly decline. Comparable transactions were down 2% compared to last year, while traffic continues to report negative numbers, with a 4% decline.
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Starbucks CEO Brian Niccol developed the “Back to Starbucks” turnaround strategy to reverse the company's concerning sales declines.
The company aims to boost sales and increase foot traffic in its stores by returning to its roots, personalizing the coffee shop experience, optimizing operations, and prioritizing coffee quality.
‘Back to Starbucks' turnaround strategy
Over the last several months, Starbucks reintroduced condiment bars and ceramic mugs for in-house sipping and returned the free in-café refills to make its coffee shops feel more like homes.
The company brought back handwritten notes on to-go cups and bags to foster better customer connections. After nearly a decade, it implemented a new dress code for its baristas to enhance its iconic green apron, and invested in its workforce by hiring new leadership roles.
Related: Starbucks unveils huge store updates amid turnaround plan
To increase efficiency, the coffee giant also refreshed its menu with a simpler version, discontinuing 13 items and eliminating extra charges for milk alternatives.
In addition, it scaled back on discounts and recently significantly changed its Starbucks Rewards Program for the first time since 2023.
Starbucks is even closing underperforming stores to invest in building new locations and revamping old ones with a new design to encourage customers to stay longer.
Starbucks gives executives a major fiancial incentive
Starbucks (SBUX) is making another major change in its business, but this time, it involves a multi-million-dollar incentive.
Starbucks is proving its commitment to the “Back to Starbucks” initiative by enticing top executives to meet these goals in exchange for a hefty bonus.
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Senior leaders can earn up to $6 million in stock grants, which will be awarded to each one based solely on performance if the company meets its cost-cutting targets by the end of fiscal 2027, as stated in the U.S. Securities and Exchange Commission filing.
Additionally, the executives involved in this turnaround plan also have the opportunity to unlock payouts of up to 200% for the successful execution of key initiatives, including the rollout of the Green Apron Service program, coffeehouse uplifts, new food and beverage platforms, and a reimagined Starbucks Rewards program.
This multimillion-dollar incentives revelation comes after thousands of Starbucks baristas went on strike in May to advocate for better work benefits and salaries.
The strike led to ongoing negotiations under the representation of Starbucks Workers United to increase wages by over 2%.
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