Starbucks sticks to the plan even as more stores unionize
JohnFScott
The unionization push at Starbucks Corporation (NASDAQ:SBUX) took another step forward this week with new stores holding votes.
The downtown San Jose Starbucks (SBUX) became the 23rd location in the state of California to unionize. Employees pointed to issues with the company's hourly cuts, inadequate staffing, and safety as they voted unanimously vote in favor of unionization. In New Orleans, a local Starbucks store voted 11-to-5 in favor of unionization to become the second location in Louisiana to approve the measure to form a union.
The unionization efforts at Starbucks (SBUX) have been playing out slowly and have not been a major financial consideration so far. While more than 300 stores in the U.S. have voted to unionize, none of the employee groups from those stores have been able to negotiate a bargaining contract with the Seattle-based coffee chain giant. Earlier in the year, BTIG analyst Peter Saleh predicted negotiations could continue for the balance of 2023, with little to no resolution. A survey by BTIG also indicated that consumers are unlikely to abandon Starbucks (SBUX) - even if the unionization efforts fail.
"Our survey found that only 4% of customers indicated that they would never visit again if Starbucks and the unions failed to reach an agreement, while the vast majority (69%) said it would have no impact on visit frequency. Among the rest, 16% indicated they would visit less often, while 11% said they would be more frequent customers, essentially offsetting each other."
In Senate testimony in March, Starbucks (SBUX) founder Howard Schultz vigorously defended the longtime culture at the company of treating employees well with testimony that recounted his own humble beginning. He also observed that employee benefits at Starbucks compare very favorably to benefits at other retail chains. A new disclosure from the testimony was that Starbucks (SBUX) now has an average hourly wage of $17.50 per hour or close to $27 per hour when benefits are included.
The overall strategy from Starbucks (SBUX) has been to fight the union push by highlighting the employee benefits already in place at the chain and pointing to the downside from unionization.
Shares of Starbucks (SBUX) fell 2.18% in afternoon trading on Tuesday and are just about flat for 2023.
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