As more stores join the union, Starbucks vows to raise workers’ pay

Starbucks’ sales soared to record highs in the coffee chain’s second quarter, but its profits took a hit from rising labor and ingredient costs and syndication of other stores.

The Seattle coffee company, which welcomed former CEO Howard Schultz last month as an interim leader – said revenue rose 15% to a record $ 7.6 billion in its 13-week quarter, which ended April 3. This was in line with Wall Street estimates, according to analysts interviewed by FactSet.

But net profits only increased 2% to $ 674 million. Starbucks ‘adjusted earnings of 59 cents per share did not live up to analysts’ forecasts of 60 cents.

After a series of meetings with workers across the country on Tuesday, Schultz unveiled $ 200 million in additional investment in employee compensation and training. This includes salary increases for employees who have been with the company for at least two years, as well as doubling the training time for new bartenders and shift managers.

Starbucks is also reintroducing a coffee mastery program for employees and considering other benefits such as increased sick time.

But there is a problem: workers who have voted for the union or shops that have petitioned to hold a union election will not be able to benefit from these benefits. Instead, US labor law requires stores to negotiate their own contracts with Starbucks.

As of Tuesday, workers at more than 250 stores in the United States had petitioned the National Labor Relations Board to hold union elections, labor organizers said. Fifty of those stores had voted to join Workers United, a subsidiary of the Service Employees International Union.

While union membership has been declining for decades, interest in organized work has increased during the pandemic. Starbucks isn’t alone in facing increased unionization efforts among its workers, with Amazon workers in a Staten Island facility vote in favor to unionize.

These efforts come amidst labor shortages nationwide and as a record number of Americans leave workproviding more leverage to workers who want to join the union.

$ 15 an hour later this summer

Starbucks announced a $ 1 billion investment in wages and employee benefits last fall, with a plan to raise U.S. workers’ wages to at least $ 15 an hour by this summer. Schultz said Tuesday that those increases will give stores the workers they need to handle customer demand.

Schultz opposes the unionization effort, insisting that the company performs better when it works directly with its employees. But he noted that employees are under “enormous strain” due to strong customer demand and business changes related to the pandemic, including an increase in mobile and drive-thru orders. The new investments will improve employee recruitment and retention, he said.

“We need to reintroduce customer joy and emotional connection into the partner experience,” Schultz said in a conference call with investors on Tuesday.

Starbucks said its sales in the same store – or sales in stores that have been open for at least a year – increased 7% globally in the second quarter, surpassing Wall Street’s estimate of 6.5%. This was largely due to the strength of business in North America; international sales in the same store fell 8% due to coronavirus restrictions in China.

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