Starbucks plans to use a cost reduction method with a difficult reputation because it continues its turnaround.
The method, called zero budgeting, asks managers to justify each element on which they spend each year, instead of using the spending of the previous year as the basic line as do many companies.
Starbucks leaders say the ZBB will help them find money because they spend more on the back of the back in Starbucks, especially by paying more hours for the baristas who are part of its stores.
“We are going to seek means to develop the business and look at zero budgetary approach very carefully to understand where there could be compensation,” CEO Brian Niccol said when the company’s results call on Tuesday.
“I love to deploy a few tools such as zero-based budgeting” to “help us get after some of these mayors may be brilliant,” said financial director Cathy Smith, who joined Starbucks in recent weeks, also said the call.
A Starbucks spokesperson did not answer questions about how the company planned to use zero budgeting.
ZBB gained popularity in the 1970s, thanks in part to former President Jimmy Carter, who defended – ultimately without success – for its use by the federal government.
More recently, some major brands have adopted the strategy.
The 3G Capital Investment Capital Company has deployed the method at Stella Artois-Maker Ab Inbev and Kraft Heinz, the company that manufactures Oscar Mayer and lunches, for example.
The strategy, which includes movements such as making all the senior executives in the coach class even flies over long distances, has reduced costs and improves business margins. But in some cases, spending discounts were so serious that it made it difficult for employees to do their job, said Business Insider in 2021.
An employee, who had recently left Kraft Heinz at the time, told Bi that she could only spend $ 5 a year for office supplies. She also had to bring her own keurig pods from the house from the company, which has made Maxwell House coffee, did not provide coffee in the office’s break room.
Other Kraft Heinz employees told Bi that strict expenditure checks have hampered the development of new products and finally made less competitive.
Some companies have adopted the method at key turning point.
X managers, formerly known as Twitter, should have used zero budgeting after Elon Musk bought the company in 2022, for example.
And in 2020, General Motors implemented the ZBB as a way to manage its path thanks to the disturbances caused by the pandemic. The company has temporarily reduced expenditure by reducing advertising and leave on certain employees, said Dhivya Suryadevara at the time during a conference on investors.
Do you work at Starbucks and do you have an idea of a story to share? Contact this journalist at abitter@businessinsider.com
businessinsider
