PepsiCo is laying off corporate employees as the company commits to millions of dollars in severance pay, restructuring, and 'relentlessly automating'

Diet Pepsi

Hollis Johnson/Business Insider

PepsiCo is kicking off a round of layoffs.

  • PepsiCo has kicked off a round of layoffs impacting employees in multiple offices, two people who were laid off by the company told Business Insider.
  • The company announced in a quarterly earnings call last week that it expects to incur $2.5 billion in restructuring costs through 2023, with 70% of charges linked to severance and other employee costs.
  • Roughly $800 million of the $2.5 billion is expected to impact 2019 results.
  • PepsiCo also recently announced plans to restructure the organization and "relentlessly" invest in automation.

PepsiCo has kicked off a round of layoffs as it begins a four-year restructuring plan that is expected to cost the company hundreds of millions of dollars in severance pay.

This week, PepsiCo employees in offices including Plano, Texas, and the company's headquarters in Purchase, New York, were alerted that they are being laid off, according to two people who were directly impacted by the layoffs. These two workers were granted anonymity in order to speak frankly without risking professional ramifications. Advertisement

At least some of the workers who were alerted of layoffs will continue to work at PepsiCo until late April as they train their replacements in the coming weeks, the two workers told Business Insider.

Due to the secrecy surrounding the layoffs, these workers said that it was unclear how many teams or individuals had been impacted. PepsiCo declined to comment on the layoffs.

By PepsiCo's own estimates, the company's layoffs are expected to be a multimillion-dollar project in 2019.

Last Friday, PepsiCo announced in a filing with the Securities and Exchange Commission that it is expected to incur $2.5 billion in pretax restructuring costs through 2023, with 70% of charges linked to severance and other employee costs. The company is also planning to close factories, with an additional 15% tied to plant closures and "related actions."

Roughly $800 million of the $2.5 billion is expected to impact 2019 results, in addition to the $138 million that was included in 2018 results, the company said in the SEC filing. In February 2018, PepsiCo announced plans to lay off less than 1% of its more than 110,000 corporate employees, including 200 employees at its Purchase, New York, headquarters. PepsiCo also announced a commitment to save $1 billion annually through 2023. Efficiency and restructuring were major themes in PepsiCo's quarterly earnings call with investors on Friday. Advertisement

"Our second set of priorities ... involves becoming more capable, leaner, more agile and less bureaucratic," CEO Ramon Laguarta said. "In doing so, we will drive down cost and that enables us to plow the savings back into the business to develop scale and sharpen core capabilities that drive even greater efficiency and effectiveness creating a virtuous cycle."

Being leaner and more agile seems to be linked to cutting jobs, with CFO Hugh Johnston confirming to CNBC that the company plans to lay off workers in positions that can be automated. Laguarta said on Friday that PepsiCo is "relentlessly automating and merging the best of our optimized business models with the best new thinking and technologies."

Last week, PepsiCo announced it would reorganize its beverage business into four US regional divisions and a single Canadian division, according to an internal memo obtained by trade publication Beverage Digest. According to Beverage Digest, the memo states the restructure will "simplify the way we work, remove red tape and push decision-making and resources into the market." Advertisement

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