Starbucks is softening its stance toward unions
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Sarah Grillo/Axios
Starbucks is softening its stance toward unionization after years of pushing back.
Why it matters: It's a potentially huge shift for the chain and a signal of the staying power of the labor movement that surged in the wake of the pandemic.
- "They know this isn't going away," said Nick Setyan, an equity analyst at Wedbush who covers Starbucks. He called the company's new posture "capitulation."
- Setyan said recent worker walkouts were a turning point. Also, at least five more stores this month voted to unionize.
Zoom out: Union organizing efforts have been a public relations headache for Starbucks since at least 2021 when a store in Buffalo became the first to vote for a union. Meanwhile, pressure from labor regulators isn't slowing.
Zoom in: Starbucks' strategy shift began in March when Laxman Narasimhan took the CEO reins from founder Howard Schultz, who had repeatedly clashed with workers over unionizing. The new CEO spoke of the need to care for customer-facing staff, per Reuters.
- It's accelerated over the past week — last Friday, Starbucks vice president Sara Kelly sent a letter to Workers United (the union that reps workers), saying the company wanted to restart bargaining.
- The union has yet to bargain a contract. Starbucks now says it wants an agreement by next year.
- On Wednesday, the company released an audit on its labor relations practices that was commissioned by Starbucks — after a shareholder vote forced its hand — and conducted by a former management-side lawyer.
- Though the report asserted Starbucks didn't have an "anti-union playbook," it did find the company was unprepared to deal with its unionizing workforce and acknowledged that store managers made mistakes in how they handled the situation.
- The report offers recommendations for improvement — including better training. Change starts with "tone from the top," the audit says, suggesting that the company should reach agreements with the union "expeditiously."
What happened: Starbucks initially believed it could fend off unionization by messaging about best-in-class wages and benefits, Setyan said, noting that it's true the chain offers better compensation than competitors.
- "Internally, they felt kind of aggrieved," he said, that workers who management perceived as well-compensated would want to organize.
- For a while it seemed like the messaging campaign was working, but the Red Cup Rebellion walkout last month and a flurry of new union votes changed minds.
- Starbucks has historically been very sensitive to public relations — and it became clear pushing back isn't great for its image, Setyan said.
The other side: Union representatives are skeptical of Starbucks' new position.
- "We are hopeful your letter is indeed the beginning of a sincere effort, and not a publicity move in the face of pressure from partners, Wall Street, shareholders, and others," Workers United president Lynne Fox, said in a letter to Kelly last week.
What to watch: If Starbucks' change in tone is a sign that the company will finally come to terms with these workers, and agree to a contract, or just a shift in its public stance while it continues efforts to avoid a deal.
