Starbucks recently reported a challenging quarter, with U.S. same-store sales falling by 3% and a 7% drop in traffic. As a result, the company had to cut its 2024 forecast. The CEO, Laxman Narasimhan, acknowledged that Starbucks was facing a more cautious consumer base when it comes to spending. He also identified the need for improvements to stores based on troubling trends observed. Narasimhan highlighted the challenges that union workers have been advocating for in their pursuit of better working conditions. The focus is on creating a more stable environment for partners through investments in equipment innovation, process improvements, staffing, scheduling, and waste reduction. These efforts are intended to enhance the working environment in stores and reduce business risks.
Workers United, the union behind the Starbucks organizing, has been gaining momentum over the past three years. The organizing efforts began in Buffalo, New York, under the previous CEO, Kevin Johnson. The workers, inspired by their experiences during the Covid-19 pandemic, pushed for changes in the company’s cafes. Over 430 unionized stores and a change in CEO later, significant progress has been made in contract negotiations. Both Starbucks and the union are optimistic about the future and are working on a framework that will shape every single-store contract moving forward.
In internal surveys and bargaining committee meetings, union-represented partners consistently rate “staffing and scheduling” as their top priority issue. The majority of partners report frequently working short-staffed, and some are scheduled for fewer hours than they desire. The union has been advocating for better pay and benefits. Starbucks claims it has made substantial progress in staffing and scheduling over the past two years by implementing an advanced staffing model. This model takes into account historical and current trends, available product types, and upcoming promotions to ensure partners receive more hours and have stable schedules.
Former Starbucks CEO Howard Schultz recently called for management to spend more time with workers to understand ongoing challenges. This marked a shift in tone from his previous combative attitude towards the union challenge. Narasimhan, mentored by Schultz before taking on the CEO role, has emphasized the need for a focus on U.S. operations to address the company’s decline. Schultz stressed the importance of prioritizing the customer experience in stores over relying solely on data. This call to action from a former leader adds weight to the ongoing negotiations between Starbucks and the union.
Starbucks plans to introduce new initiatives to enhance customer experience and increase efficiency in its stores. The company will open its mobile order and pay app to non-rewards members in July to attract back occasional customers. Additionally, the Siren System will be implemented in 1,000 stores to improve customer ticket times. This system includes new equipment and protocols to streamline the preparation process and reduce wait times for customers. These changes aim to address operational challenges and enhance the overall customer experience.
The involvement of the CEO and former CEO in acknowledging and addressing challenges faced by Starbucks and its baristas union is a positive step towards fostering a more collaborative and supportive work environment. The ongoing negotiations and initiatives implemented by the company demonstrate a commitment to improving working conditions and customer experience. By prioritizing the needs of its partners and customers, Starbucks aims to rebuild its reputation and drive future growth in the highly competitive coffee market.
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