Starbucks Brewing up Global Tech Plan to Bring Jobs Back in-House and Slash Costs

Coffee chain Starbucks (SBUX) could open up new global tech hubs to help bring jobs back in-house and slash costs.

U.S. Or International Location

According to a Bloomberg article based on a recording of chief technology officer Anand Varadarajan addressing his division yesterday, the group is searching for a location for its tech staff that could be in the U.S. or international cities.

At present, Starbucks outsources large numbers of its tech roles to third-party companies who reportedly are located in areas with “lower cost per head” but charge a markup. Instead, according to Varadarajan, Starbucks wants to bring these positions back in-house to have access to the skills without the cost of using a middleman.

Indeed, it wants to increase the share of in-house tech workers to at least 80% from about 45% at the moment. To do that it is looking at creating its own tech hub in the U.S. but also potentially abroad.

“We’re going to be planning for more sites in the future,” said Varadarajan. “It would be kind of facetious and disingenuous for me to say we’re not looking at sites outside of the United States.”

Cost-Cutting Drive

The move comes as part of the group’s huge $2 billion cost-cutting drive, which Chief Executive Officer Brian Niccol hopes will help turnaround the ailing business. This has already reportedly resulted in the loss of tech jobs.

However it is also investing such as is in its Nashville, Tennessee expansion. Reports note that Starbucks is putting $100 million into Nashville, along with around 2,000 jobs, including some tech positions.

It has offered relocation packages to employees in its sourcing team but it has reportedly faced resistance from some workers not so keen on the move from Seattle to the south.

Other investments include hiring more store workers and renovating its cafes.

Starbucks Stock Slide

Starbucks, and its stock, have had a tough last couple of years hit by price increases, strong competition from other coffee chains both in the U.S. and in foreign markets like China, and a series of boycotts and strikes tied to unionized barista complaints over pay and benefits.

Niccol, who joined the company in 2024, halted the price hikes, simplified the menu and targeted faster service.

There are signs of improvement with its recent Q1 earnings showing global revenue growing 5% year-over-year to $9.9 billion, with global comparable store sales accelerating to 4% growth. It reports its Q2 earnings next week.

Is SBUX a Good Stock to Buy Now?

On TipRanks, SBUX has a Moderate Buy consensus based on 14 Buy, 13 Hold and 2 Sell ratings. Its highest price target is $122. SBUX stock’s consensus price target is $102.24, implying a 2.73% upside.