REFILE-Starbucks CTO resigned Monday amid tech revamp

By Waylon Cunningham

Sept 26 (Reuters) - Starbucks' SBUX.O Chief Technology Officer Deb Hall Lefevre resigned without a permanent replacement, according to an internal memo sent to corporate staff on Monday, seen by Reuters.

The memo, written by Chief Financial Officer Cathy Smith, named Ningyu Chen, previously senior vice president of global experience technology, as interim chief technology officer.

Lefevre's resignation comes as Starbucks announced its second round of deep cuts in corporate roles, effective Friday, as CEO Brian Niccol pushes a tech revamp in stores to make labor more efficient, part of a turnaround strategy to revive flagging sales after six consecutive quarters of decline.

USING AI TO REVAMP HOW CAFES OPERATE

The revamp includes an AI-powered automated inventory counter that is in the process of being rolled out to all company-owned stores in North America by the end of September. Other initiatives include an AI assistant for baristas, a new point-of-sales system, and a queuing algorithm meant to help baristas sequence orders during rush hour.

Lefevre, a former McDonald’s MCD.N executive, was hired in May 2022 as part of the chain's focus on improving its drive-through, mobile ordering and other systems. The memo said she planned to retire.

"Our tech priorities aren't changing," the memo said. "We're focused on the tech work needed to deliver our Back to Starbucks plan."

Lefevre didn't respond to a request for comment Thursday night.

On Thursday, the company said it would close underperforming stores in the United States. Its overall company-owned U.S. and Canada store count is expected to drop by 1%, with several hundred stores expected to close by the end of the 2025 fiscal year. It also said 900 non-retail roles would be eliminated, with affected employees being notified Friday.

The technology initiatives are part of a corporate turnaround called "Back to Starbucks" being pursued by CEO Brian Niccol, who took the helm last year to revive the chain's fortunes. He has aimed to revive the chain's "coffeehouse" appeal following six consecutive quarters of sales declines.

Starbucks’ February layoffs of 1,100 corporate employees hit the IT team particularly hard, a source familiar with the matter said Thursday. They said an outside contractor named Tata Consultancy Services, based in India, has been given an increasing role in Starbucks IT division.

Starbucks in a statement Friday said the company will “continue to have a very significant in-house technology team, but the focus is on the most important capabilities and the most important work.”

Shares have lost more than 12% of their value over the last 12 months, compared with a 16% increase in the broad-market Standard & Poor's 500 Index .SPX.