Starbucks And Union Trouble

Starbucks (NASDAQ: SBUX) and thousands of its workers who want to unionize have battled for two years. Former CEO Howard D. Schultz has pressed to keep organized labor out of the coffee chain’s locations. The National Labor Relations Board has, or will, reviewed dozens of unfair labor practices charges. Schultz was found to have intimidated one store worker, according to an NLRB judge. The battle has been brutal at times. However, recently, Starbucks, under new management, has changed its tune.

Sara Kelly, chief partner officer of the coffee company, sent a letter to the Workers United President. In it, she wrote, “We are proposing that bargaining resumes with a set of representative stores in January 2024, and we are open to hearing other ideas and rules of engagement on how bargaining could proceed.” Based on Starbucks’ past behavior, the olive branch is a surprise. The union represents almost 10,000 workers.

It could be that the new CEO, Laxman Narasimhan, does not want to fight unions as his predecessor did. These fights cut two ways for Starbucks. Higher pay and better benefits will cost Starbucks tens of millions of dollars, perhaps more. However, Starbucks has to worry about keeping its stores open and its friendly image, which currently extends to customers but not workers.

Starbucks can afford to pay more and offer better benefits. In the most recent quarter, it had revenue of $9.4 billion and net income of $1.2 billion. Same-store sales rose 8% compared to the period in 2022. Narasimhan said, “We finished our fourth quarter and full fiscal year strong, delivering on the higher end of our full-year guidance.”

According to The Guardian, Starbucks has long been one of America’s lowest-paying companies. Some workers are paid as little as $15 an hour.

Starbucks does not just have to contend with the unions and profit considerations. Consumers often come to Starbucks because of its friendly workers. The relationship between customers and workers must be maintained to support the Starbucks brand. No wonder management wants to continue talks to keep the worker relationships smooth.