Starbucks Corporation still faces elevated labor tensions as it works to execute its recovery plan, “Back to Starbucks.” The company has faced ongoing disputes with Starbucks Workers United, the union representing employees at over 600 locations across the United States. With newly appointed Chief Executive Brian Niccol at the helm, Starbucks is navigating through difficult terrain. As the company moves forward with sunk store closures, layoffs, and other major organizational changes.
Earlier successful turnarounds by Niccol — at Chipotle and Taco Bell — have him at the helm of an equally pivotal time for Starbucks. His plan includes more than just store closures. It involves selling a 60% stake in the company’s China business. These moves are a part of an effort to stabilize that brand and increase profits. They arrive on the heels of only 1% growth in same sales at global stores open at least one year, the first quarterly rise in almost two years.
Starbucks has witnessed hundreds of store closures and has implemented thousands of layoffs as part of this tactical pivot. In a recent call with analysts, Niccol acknowledged the challenges ahead by stating, “We have more work to do, but we’re building momentum.”
As Starbucks tries to figure out its next steps, labor relations has been ugly. Michelle Eisen, a Starbucks Workers United spokesperson interviewed by CBS, explained the intense pressure that baristas are under. She commented, “Every single day at this company, as of recently, has been very, very difficult to be a barista.” The union has been fighting tooth and nail to improve pay and boost staffing levels. Talks have stalled over charges of bad faith bargaining against Starbucks.
The conflict heated up to an incredible degree. More than 80 Democrats in the House and Senate went as far as publicly sending letters to Niccol, calling Starbucks’s actions “union-busting,” and demanding that the company negotiate in good faith. This political pressure interjects another wild card into an already tenuous relationship between the company and its workforce.
This January Starbucks and the union will call in a federal mediator. Their hope is to force real discussions and put an end to the current labor unrest. Jaci Anderson, a spokesperson for Starbucks, expressed openness to dialogue, stating, “When they’re ready to come back, we’re ready to talk.” Starbucks’ actions demonstrate a consistent pattern of bad faith and unwillingness to work with the union. Together, they are working through this ongoing deadlock.
While negotiations are still proceeding, the union has heard from Starbucks execs that some demands are off the table. Sara Kelly, the company’s chief partner officer, pointed out that any agreement must consider operational realities: “Any agreement needs to reflect the reality that Starbucks already offers the best job in retail.” This mirrors a sentiment of many inside the company—specifically, that their pay and the environment they work in is already good enough.
As union representatives say, what’s being done now isn’t sustainable. Eisen remarked, “You should not be evolving to the point of running your workers to the ground,” underscoring her belief that employee welfare is essential for overall success.
And in academic circles, there is no denying that employee satisfaction leads to customer experience. Business strategy professor Stephan Meier emphasized this connection: “Happy customers have to come from happy employees.” This view provides cover for labor advocates’ claims, who are adamant that fixing worker complaints is key to Starbucks’ success in the future.
With its new efforts, Starbucks is certainly taking on a difficult landscape. It’s too early to tell whether Niccol’s turnaround strategy will result in permanent changes, or if persistent labor animus will stifle improvements. The next few months will be enormously important as Congress and the Administration aim at possible breakthroughs with an eye on productive solutions and continuing sound operations.