Why Starbucks Must Crush Unions to Survive
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- Опубліковано 19 тра 2024
- Starbucks has been a mainstay in business school literature as a role model for innovation, branding, vertical integration, and corporate social responsibility. The impact of Starbucks is well-known - the company repositioned coffee into a mainstream drink that people consume these days for taste and aesthetics as much as function. Thanks to efforts from its CEO, Howard Schultz, Starbucks has carefully crafted a uniquely respected and celebrated image in academia, business, political, and investment circles. Starbucks is not some basic coffee retailer, but instead a forward-thinking, fast-growing, innovative, socially responsible company that always does the right thing for customers, employees, investors, farmers, and environment.
This makes it especially ironic that Starbucks, the poster child of corporate social responsibility and model employer, is now waging such a high-profile, visible, ugly war with its baristas across the United States - using every trick in and outside the book to crush unions and squash any labor progression efforts before it can form.
While union efforts are also happening at Apple, REI, Walmart, Target, and Amazon, none of these corporations have followed the scorched-earth approach of Starbucks. For a company that makes billions every year selling syrup and microwavables, surely the profits must be high. Can Starbucks really not afford to pay a few more bucks to its retail workers? In this episode, we’ll dive into the business of Starbucks, strip away the corporate marketing, and uncover why the company’s image as a dominant, fast-growing, business depends on successfully crushing unions.
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0:00 Nurturing Human Spirit
9:03 The Legend of Howard Schultz
16:43 Dwindling Growth Narratives
22:51 Investors Optics Against Unions Economics
🤔You are Starbuck’s newest CEO. Beyond the unions, you have walked into a difficult situation. The most popular beverages sold these days (iced drinks with flavored syrups) are significantly different from the company’s coffee roots, you have a weak business in Europe that hasn’t performed in over 10 years, and a promising business in China who is still opening slowly. On top of all this, you have a workforce of baristas demanding greater operational simplification and automation, which would potentially hurt store experience and drink quality.
The other conundrum is that the licensing model, which has fueled Starbuck’s expansion over the past two decades, seems to be at its limit. Licensing has been successful in protecting the Starbucks brand and ensuring a consistent store experience around the world - but that control has come at a cost.
The revenue / profits from licensed stores that flow to Starbucks the company are peanuts compared to companies who follow the conventional franchise model. For example, Dunkin’ Donuts enjoys 30-40% operating margins using franchises despite not having anywhere close to the global scale and popularity of Starbucks. Investors are pressuring you to present a vision like your legendary predecessor Howard Schultz.
As the new CEO, what would your growth story be for Starbucks?
As the new CEO of starbucks I am taking the company to double digit growth through deep investment into AI
This is gonna sound nuts, but I'd take a real hard look at developing some locations into a 3rd space WeWork style office space rental.
Think about it: Starbucks already has free wifi, and it's a cliche that writers and other professionals camp out at Starbucks all day, why not monetize that?
Charge $120 for someone to work in a Starbucks themed office environment for 10 hours, or $40 to rent a meeting room? It could work.
@@davidstruck8109 what would be the added benefit worth 120$ a day of working in a Starbucks themed office environment compared to a normal café? Offering private rooms for meetings might make sense though
Labor concerns have to be first. Front line staff are what make the brand and if you care about customer experience, thats where the priority has to be. It shouldn't be terribly hard or expensive to do consistent work hours. By opening up union bargaining, you can tell employees and the public that you're listening.
Many of the folks who don't go to Starbucks but go to other coffee shops do so on these kinds of principles, and workers rights is the next wave of our society ecominc climate.
First would be to shut down the worse performers in Europe and stick to having locations only in big cities/tourist locations.
Second would be to change the franchising model towards a more KFC style model with lesser corporate control but more consistent returns.
Finally, for PR purposes I would run an ad campaign showing how giving in to the union demands would affect store performance.
If Starbucks is already selling waaaaay overpriced drinks, and has to crush unions just to survive, Starbucks shouldn't succeed as a business
Exactly
The teenage market who uses their parents money is the reason they're still open
yet you buy overpriced iphones, over priced designer clothes made in asia...this is business these days...this is capitalism
Starbucks is already paying its employees far more than the average retail store. It makes sense for them to want to crush unions since what theyre asking for is pretty absurd considering the entire market as a whole
Dumb take by dumb people.
Companies should not be told by 3rd parties (unions) how to run their business.
Im skeptical about the claim that everyone joylessly sucked down bad coffee before starbucks came in. The cafe/diner as a meeting place has a long history. What Starbucks did was premiumizatuon.
Also the fact that you have long established coffee cultures with cafés all over Europe for example...
lets be real here. diner coffee wasnt good
Depends your talking about some diner coffee or some nice local café? Starbucks made good coffe available for everyone
As meeting place they where mostly for the upper class
Starbucks' coffee isn't even good.
Something that isnt mentioned about Europe but noteworthy is that Starbucks entered a market where local coffee chains have a good stronghold and independent coffeehouses are abundant. Europeans also take their local coffee culture seriously whether its Fika in Sweden, Vienna coffee, or the Coffee Bar culture in Italy. That is something hard to penetrate and take over in trying to change local coffee habits. Along with Starbucks is just expensive, like 2-3x more expensive than local coffeehouses from what some European friends have told me. They've basically backed themselves into a corner and seems to only being staying afloat off locations in tourist areas where they get traffic.
Thinking that Starbucks was created after a trip in Italy and was inspired by italian coffee bar makes me bewildered
Yeah cafes are pretty great in Europe. When I visited Rome I was able to get espresso and a Nutella stuffed croissant for like 2,50 eur which was about 2.70 usd at the time. Not only was it cheaper than any option in the US, it was wayyyy better and tipping isn't even expected lol.
They tried to enter the Austrian market. Not surprisingly, they didn't last very long.
starbucks make good milkshakes, but their so-called "coffee" on the other hand
@@elfulano5884 they tried to enter the Australian market - they went bankrupt.
I think it's more of a "chasing infinite growth" problem then survival problem. They clearly can make money while obliging to union demands, so it's not like they'll die if they do. The problem is that they won't make more money year over year, and I guess that's all that matters.
Well you're right in that they wouldn't die immediately, but the current economic landscape is so psychotically competitive by design that if a company did decide to stop pursuing growth as a development model, they would immediately be cannibalized and swamped by their competition.
Surprising to me that Starbucks still paints itself as growing, innovative or edgy, or anything other than commoditized F&B.
And health wise, how long until the soda tax spills into these Starbucks "drinks" that have more calories than you can count?
Former stabucks barista, one grande frappacino has around 300-450 calories depending on the flavour. It’s more than a can of soda.
I don’t think that their lobbyists would ever let that happen. Especially when our politicians worship these big companies who give them money. People will continue to gulp down their overpriced mix of different sugars and then turn around and complain about being broke and having health problems.
@@atlantisundiscovered Okay what about coffee. Starbucks is a Coffee company.
@@kenobi8257 Not anymore. The cold drinks section is growing. Anecdote, but most people I know that regularly go to Starbucks are getting cold drinks and maybe a snack.
@@ling636 but that’s “people I know”. Statically people get coffee at Starbucks.
I’m in a union and worked in retail, there are reasons for wanting a union other than pay. Stable schedules are one. Your manager having the power to change you schedule at a moments notice is BS. You can’t plan on things from week to week when you don’t have the same schedule. Or if there is a labor or safety violation, unions are better able to handle that than reporting a violation to an underfunded state agency. Unions have their own problems, but you can go the extra mile of the Starbucks Union and be independent. You don’t need to be in the AFL, SEIU or NEA in my case. You can be independent and do what you want. Which is serve members.
There should be a federal law. In most developed countries workers are protected by GOVERNMENT. No corporation or company can change rules. Imagine, 3 years of PAID maternity leave, 28+ days of paid vacation, healthcare - you can miss your job for weeks and still get money, no changes in your schedule, no extra fees, no one can fire you without a 2 month notice! That is how it shoud be everywhere.
@@mantolinez Those laws all exist due to workers organizing in unions and fighting for them. Those are concessions that were won as a result of said fights. The government ultimately services the class that controls the means of production so relying on said government for your rights as a worker is not a good idea. The minute the rulers decide that you're asking for too much or you're too disobedient they'll bring out the truncheon to put you back in your place.
@@pointvector1951 BRO SAID EUROPE IS ON THE BRINK OF COLLAPSE BECAUSE THEY PROTECT WORKERS LMFAO get shit on lil bro
@@pointvector1951 Starbucks is not a startup!
@@danh9083 not needing and no trade offs are not the same thing. With teachers unions there are plenty of reasons not to be in the NEA if your bargaining unit has its business together and it’s relatively large. I personally wouldn’t vote to disaffiliate with the NEA, not because I like them, but because my bargaining unit has a long history if incompetence. Like me not getting the ballot to vote on the current contract.
The strongest arguments for Starbucks being *exceptional* were always just basic human things: A shared 3rd space for people to chat or work in, Baristas that cared about the customer experience, quality coffee, free Wifi, decent interior design, etc. None of these things requires the company domination on top of it. You could get all of this from a good coffee shop in a Bookstore or Library. I wish the Unions luck in their struggle :)
Didn't Starbucks get rid of pretty much all of these things over the years though? Most of the Starbucks that are open these days are drive-through only, and the ones that are or were places you could actually step inside are so focused on pushing you out as soon as you make your purchase in order to get to the next customer.
It just sounds like another race to the bottom to chase after short term profit at the cost of long-term sustainability
Struggle? How? Slinging coffee is almost a zero skill required job. Anyone with a pulse can do it. The "baristas" sticking their chests out and flirting with customers, giving them a couple seconds of smile and direct eye contact in solicitude of a tip is literally the opposite of skilled labor. In short, these low skill people are lucky to have any job period, they are "struggling" against nothing and don't deserve higher pay. They are already being paid way more then their skill level and productivity warrants. I hope Starbucks follows the Burger King model and replaces them with kiosks and robots.
@@itsmatt2105 Are you a real person?
@@itsmatt2105 You would make an exellent ceo, are you in buisness school?
When he said that starbucks stores are the one of the only reliable places you can get free wifi it really made me think about how sad our society is. Like why can we not have more public places like libriaries, subway stations, parks, or literally any place where you can just spend time and not have to be buying anything to get access to basic services like wifi everyone depends on.
One might argue that if Starbucks isn't able to provide adequate pay and working conditions, which is then leading to workers looking to unionise, Starbucks business model is flawed and they shouldn't survive, especially if the only way they can is by exploiting workers.
But that would require considering people who aren’t rich as people, and that just doesn’t work for a certain type of person online
I was a bit disappointed that this 30min video basically says "if Starbucks paid workers more, then they would generate less profits than shareholders would like." Well, uh, yeah. "Think of the poor shareholders" is what I assumed the reason was before I spent 30min watching this video.
I agree with you: if they don't need to union-bust to survive, they're greedy. If they do, they don't deserve to exist. Our economic system is broken.
starbucks' business model isnt flawed
it does exactly what it and every other business is always designed to do
private property is theft, after all
Unions shouldn’t exist. “I want adequate working conditions” is just code for “I couldn’t hack it.” As long as nothing illegal is going on, you either have to deal with the conditions or quit. Life isn’t fair - just be thankful you aren’t making mud bricks in blistering heat for a dollar a week (which is something some people have been willing to do without complaints).
most starbucks pay over minimum wage plus tips and theyre inside making coffee... baristas are just entitled and think they're skilled laborers
As someone who grew up watching Starbucks come in and crush local coffee shops with their overpriced swill and brutal corporate tactics, this video had me cry-laughing.
now it seems small local coffee shops are thriving
As a person who grew up drinking Robusta Singapore coffee , along with certain beans in Africa which definitely isn't just simply cheap arabica coffee, i agree that starbuck coffee is a joke.
@@steveng3899 You don't have to like Starbucks, but that's just nonsense. Starbucks began by selling coffee beans. Their coffee quality is excellent and they sell a very wide variety of coffee beans from all over the world. If you knew anything about Starbucks you would know this already.
@@Nebula37 How to say you've got black fingernails...without saying you got black fingernails.
@@jadenpark7943 Not really. Only in certain urban areas. Starbucks still dominates most of the country.
I work in a Starbucks in Hawaii. I get $16.25 before taxes. I'd say the average price of a drink we sell over here is about $6-7 and food included its often about $10-15ish per person. We often clear around 10-13kish in revenue every day and this is considered low compared to what we were doing per-COVID. One apsect of unions negotiations which I feel were not adequately brought up were guaranteed hours. Living in Hawaii the cost of living is quite exorbitant. Despite me pestering my boss for more hours constantly, I'm averaging about 30 to 25 hours a week. Nobody on my store's schedule is full time except my manager and the average amount of hours between the 20ish partners at my store are about 20-24 hours a week. For a store that's consistently bringing in about 13k a day you'd figure we'd be able to afford more hours for our partners, but corporate continues to cut hours and our manager is constantly understaffing because as she descibes it "we are not earning enough to justify our hours". Higher wages would be nice but at this point I'd be happy with just being guaranteed enough hours to pay my rent and buy groceries. Overall working for Starbucks isn't bad but I can never see myself making a career out of this and I pray for anyone who attempts to do so.
It almost not related but I can understand they point about not earn enough to justify the work hours. In my company, depend on department we was giving different hours to complete the job. If it too busy, it can go over 600 but if not it going down to 400. So either we have to improve to work different kind of task to earn our full hours or the company have to hire extra people and we have to split the default hours that set for each paycheck. And they limit how many full time worker in one department except leader role so it up to our leader to determine the schedule to be fair for everyone. Some time the leader have to give up couple hours to fill the gap so we can't be in situation under 30 hours shift.
You live in Hawaii and survive by working at Starbucks. Ain't no way
Guaranteed work hours is something that is so important. I know people who have been disqualified from benefits because their hours didn't meet the minimum, they begged for more hours and they weren't given any.
The bottom line of this is the benefits of being a full-time employee... It's complicated and I won't get into it here, but as soon as a business claims an employee as 'full-time' there are a myriad of other things which come into play, especially needing to provide the employee with healthcare. While the employee themselves might not see why they can't get more hours, the company looks at the cost of everything else, which is why it is cheaper to higher 5 'part time' employees than 2 'full-time' employees.
On a similar note, that is why they fight so hard not to give raises. I forget the exact figure but for every dollar an employer adds to an employee's paycheck, it's something like 2.50 the business itself ends up paying, due to having to pay the employee's myriad taxes (Social Security and Medicare for instance). And the more the employee makes, the more those taxes go up.
it's definitely a money game. It sucks cause at least with most of the people I know who work retail they get hired on as full time, or with the expectations of full time, but over time they loose hours and are forcibly part time. Stores suck people in with full time, benefits, etc. But then screw over the employee :/
The best thing people can do is to buy from (small) local coffee shops and make coffee from home.
A point of concern is that on average local stores pay their employees on average 35% less than the chain locations do.
how is it any different? At the end of the day, local coffee shops are just businesses, like Starbucks, that statistically speaking are paying employees far less and less benefits today. Do you really want to support that?
@Investment Joy nonsense. How can locals pay worse than minimum wage?
@@jessip8654 They usually do. Mom and Pop shops/local businesses can be even more cutthroat.
@@calmexit6483 in what state? At least in California, from what i can find on government sites, there are only a handful of groups who can even be considered for sub-minimum wage, the two biggest being full time students and people with disabilities.
Otherwise i don’t see how any location can pay below a minimum wage legally?
I never understood the immense draw of Starbucks, and places like it, because drinking a coffee milkshake every day seems to unhealthy to ever justify, and if I want black coffee, I’ll make it at home for 20 cents a cup rather than have it at Starbucks for $4 a cup.
I just get my slave produced coffee the boring way.
They basically backwards engineered milkshakes.
You mean "myself" not "my slave". right?? lol
Making it at home saves time too.
@@Danji_Coppersmoke i think twerkingfish was talking about the people who make the coffee, who are often woefully underpaid, if at all. thats why you sometimes see coffee in stores branded as ethical or whatever
Yeah, you can either get an awful overpriced coffee at Starbucks (have you tasted their roasts that are anything above medium, basically oily ash), or you can make your coffee at home with a better bean (organic, fair trade, single source, roasted by a local roaster) and better technique (provided you put the bare minimum in). As with most things, diy is cheaper and better.
As an Australian I am proud that we hate Starbucks
I love that all other countries people act like they speak for the country, maybe they do, and that makes it even worse.
@@Kieran6spdm Most Australians do not like Starbucks, hence why it failed miserably in Australia.
@@Kieran6spdm I would normally agree with you. But in this case, its very evident. I don't even like coffee but Australian coffee business is extremely competitive, and its drinkers are very picky. But once a coffee shop has made its reputation in a particular crowd/location/community, its customers are extremely loyal. The starbucks model would never work in Australia.
Its not just the brewing at the coffee shop. The entire supply chain affects how the coffee tastes. From the beans, to the roaster and even what milk and where it comes from. My wife was a barista during her student days and she cannot find any thing that tastes as good as Australian coffee in Europe. Maybe they have good coffee too or different tastes but another reason why the starbucks model would not work.
@@Kieran6spdm Australians sent StarBucks into receivership because we refused to drink their terrible coffee offerings. We a long established quality, almost exclusively independent, coffee culture.
Proud of you too
By the way, you know it's a grift when they start talking about all these vague, massive, indefinable causes. "There are millions of children in Africa who can't even afford basic medicine or a visit to the doctor... and Starbucks is going to vaguely try to make that better, somehow, we promise." Not "we need to help our local community", not "we need to focus on small-scale issues we can tackle", not "let's help some of our displaced and homeless veterans who were abandoned by the VA and their families", no no, it's "Africa", it's the "starving children in Africa". The person who wrote that probably couldn't name a single country in Africa but it's fine, it's totally not a grift guys, they're gonna do it. That's why African kids aren't starving anymore, Starbucks sent them sugary drinks and cheap pastries and now they're all full and healthy. Oh wait, shit...
You always do your benevolent posturing in the countries where you have the least locations because it's harder to prove that they're lying then
Well said. Any Corporation doing ANY charity is for tax breaks or publicity. You can't even pay your workers a living wage? How you helping the starving kids in America. Or heck someplace would like clean drinking water.
Africa is and almost always has been an excuse to make money.
Exactly. Like “stopping hate” or “defending freedom and democracy”. There’s absolutely no way to pin someone down on a nebulous promise like that. Whereas these union organizers are making specific demands. Concrete things. My bullish detectors go up when that type of vague moralist rhetoric starts getting thrown around.
@@gildedpeahen876 Bingo. One side has platitudes and the other has the figures and numbers laid out.
I very recently quit Starbucks after being a supervisor at corporate owned stores for 4 1/2 years and a barista at a licensed store for 2 years. This video really perfectly illustrated how all they care about are ever growing profits and higher and higher margins. What people seem to forget is the human aspect of it all. Tell me, how is someone supposed to pay rent earning $15/hr with an unpredictable schedule? You get hired as "full time" and are expected to have full availability but one week you might get lucky to get 35hrs and the next 30. It might not sound like that dramatic of a difference but 5hrs of pay can be the difference between paying the phone bill or buying groceries. Many people rely on working multiple jobs and having roommates just to get by. Even getting a second job can be a difficult game to play because then you have to change your availability and risk loosing even more hours. Does $20/hr sound like a lot? Of course. But when you take into account the ever rising cost of housing it should be a no brainer that wages go up as well. As a supervisor at Starbucks, it drove me crazy seeing week after week our record breaking sales while also being told we just couldn't afford more labor. It's a function of capitalism to squeeze as much production out of workers for as little cost as possible just to chase growing margins for the people at the top while the ones actually working struggle to survive.
Yeah the last 5 years seem to be the worst for cost as far as I can tell. Form 2009 til 2013 housing grew more expensive but I could still live on about 15K for every 20K made so not sure how those making $15 an hour survive now.
I think that's a function of business rather than a function of capitalism. And I will say not all businesses operate in the same way. I worked in restaurants in thr EU for almost a decade and most of them ran payroll based on a % of turnover so you had much better flexibility in terms of pay and hours for teams
So they can't pay their workers their worth because they're spending that money on corporate social responsibility?!
This video is straight corporate shill.
How much is a dude that can make coffee worth? Nothing no skill at all minimum wage
@@ronsirman6867starbucks: "We have the highest quality baristas and coffee makers, centuries of tradition in every cup"
Also starbucks "These workers are worth less than tossed gum on the pavement, a dog can do their job just as well, don't deserve enough pay to live comfortably"
@@ronsirman6867Most unions started in factories where skilled labour was not required. And it's thanks to them that we have weekends.
@Cibershadow2 it's thanks to capitalism and freedom of choice that we do what we want in USA
Also just a fun fact, Starbucks in Poland charges basically exactly the same prices as in USA, despite the wages being much lower (and also most products being much cheaper). So you're paying like 3-4 dollas equivalent, but when you compare it to wages it's like they would charge 20 dollars. And people still buy it. Its crazy. They made coffee into a luxury and unfortunately other coffee shops also charge crazy now, because Starbucks set the tone for coffee in the city being a crazy expensive item.
Oh and guess what. They pay their workers minimum wages in Poland, obviously not the equivalent of the USA wages, which would be a nice salary for Poland's standards. Who would have thought :)
@@kk-cr4dbI was to SB maybe once in my life and my first thought was exactly that - US prices, minimum wages.
It's a huge reason why I was always the "weird one" who never drank coffee out - the first association I get is the ridiculous pricing, this is ridiculous.
P.S.: I live in Warsaw, so the prices in coffe places are ridiculous in general :d
I don't think a 20$/day wage is legal in Poland.
5.44 euro per hour after taxes times 8 = 43 euro per day.
Doubt the taxes add up to 50% of the wage being gone for the minimal wage.
Minimal wage(work contract):
2787 zł/month divided by 160 hours times 8.
139.2zł -> 32.22 euro/day.
Not sure which work trash-contract is used by Starbucks, but I guess that would be legal with a trash-contract.
Apparently Starbucks is the biggest employer on the trash-contract basis.
American work-camps in Poland: Starbucks, Amazon, ...
All that is left is for the fucking Keloggs and Tyson to have a manufacturing plant in here😂
@@niewazneniewazne1890Starbucks hires for 20 hours a week, NOT 40.
@@niewazneniewazne189020 per hour not day
Infinite growth is not possible, yet it’s treated like the norm. It’s time to unionize
Your mama's waistline infinitely grows.
@@Barquevious_Jackson Spell check silly
Why is it impossible?
@@Dyotar0 I mean at the very end you are constrained by natural resources / space / population. The Earth can't hold infinite people so you can't base growth off of an increasing population / market. Likewise we're already seeing ecological devastation in the name of economic growth. The only other avenue for infinite growth is through "innovation" and the knowledge economy but if you come to this channel you're probably aware how much of a scam that all is (usually).
@@joshserna9983 He got you there you gotta admit
The problem with Teavana (and DavidsTea in Canada) is that tea has a much more varied product landscape compared to coffee yet the potential for customized drinks is much smaller (until bubbletea/boba started trending in NA in the late 2010s). These vendors often act as a gateway to acquire first time tea drinkers who almost always move on towards smaller independent vendors and stop buying products from Teavana which by the nature of its business model has to source lower quality ingredients wholesale and sell for higher markup.
Thays because coffe is superior
People will simultaneously evangelize about how great our economic system is while simultaneously describing it as what can only honestly be seen as a hostage situation. “If you cut into our profits by asking for a higher standard of living we will leave you unemployed, we will stop building housing, we will stop providing healthcare” threatens a group of people completely unaccountable to anyone or thing. It can only be described as an abusive situation for the fast majority of people who do the work these people profit off of.
There is no practical reason why we can't have a coop economy
This is a very real hostage situation
It's a hostage situation where you can leave anytime and work for someone else though.
@@ericreinhold1819 this would only be true if one instantly got a ton of job offers the moment you walked out the door realistically one could (and regularly do) spend months between jobs looking for someone to hire them. Months where one can go hungry lose their home and become sick without insurance for most people the consequences for being laid off or quitting are extremely negative
@@carlcarlington7317 so in my opinion that should be remediated by government programs rather than unions
@@etc2913 (apologize in advance for the wall of text but this is a somewhat complex topic) I don’t really have a preference for one or the other as long as one gets there needs met and the means those needs are met are ethical the exact way said needs are met aren’t as important to me. What I would argue though is 1.people should always have a right to bargain collectively if they choose to do so and 2. that it’s undoubtable that at least currently in the us government intervention falls short of remediating these issues it’s therefore entirely reasonable for people to seek support elsewhere and entirely unethical for companies like Starbucks to deny their employees this route of remediation both as they deny employees a right to association (rights I believe should remain exclusive to individual people not corporations) and as they refuse to offer any real long term alternative. Sure they may be willing to give raises instead of unionizing but what they refuse to give employees long term is a seat at the table a way to negotiate for more in the future. That’s the real benefit to unionization imo the ability to negotiate for these things in the future outside of an unfortunately slow moving government bureaucracy.
They don't have to crush unions. They have to, like most businesses, re-examine pay scales, especially bonuses. The c suite isn't worth what they've been paid.
I don't think you quite comprehend the scale here. The C Suite is paid at most $100M a year. If Starbucks fired all of them, their operating margins would increase by 0.3%. A respectable amount, but not by any means enough.
Weather the money is to be found in corperate executive compensation or just in the shareholder profits in general is not important. The video clearly showed they have the profit margin the pay their workers more even if they kept executive pay the same.
@@andrasfogarasi5014 re-examine pay scale and fire are not the same thing, i think what they mean i pay those people less and drop some of that money lower in the chain to the forward facing people of the company like the baristas and store managers
I appreciate this video very much, since it can be hard for the public to get an accurate view of the company as it has changed through the years. One thing I think would have been an essential point to highlight is that, while many systems have been simplified and standardized for ease of adoption, the job of barista is incredibly complex and takes a plethora of skills to accomplish well. Starbucks wants to paint baristas as entitled children, when there is no Starbucks without the hands that assemble their (now sole) product. Complex beverages require attention to detail to create them to the highest standard. Customers will carry notes from baristas at their home store when they travel, because what they want is so specific that the customer cannot explain it themselves. That speaks to the ongoing relationships that require baristas to mediate their time, use communication skills to translate requests into recipes, and incorporating feedback across visits so that customer is getting exactly what they want every time, no matter who is on bar.
I have seen baristas I've trained get married and have kids, or become professionals in adjacent markets. I have customers drinks that I can never, ever forget (Half caf, five shot, venti, four pump, breve, with whip, no sprinkles, cinnamon dolce latte, which I haven't made since Obama's first tenure in office.) They want to pay baristas like all they do is press buttons and mop floors, but also want to encourage customers to request 20 ounce, bone dry, coconut milk cappuccinos (preposterous.) Without baristas forging connections that go beyond coffee and cream, there's no reason to pick Starbucks because that's what has made their model so unique. There's no energy quite like that of a fully invested Starbucks partner. We dance, we sing, we draw on cups, we memorize the routines of entire households, we put the raw sugars in after the shots but before the milk, we scrub toilets, we tell jokes, we comfort grieving customers, or congratulate milestones. It's a job that becomes more than a job and it was easier to do before the company pivoted to selling caffeine laced sugar shakes. They can either make the job fit the pay, or pay their employees what they're worth. But insisting that what baristas do is nothing while it's everything they make their money from is asinine.
Here at Starbucks we heard that money cannot buy happiness. We chose to believe that. So clearly this is a you problem. Now, continue to sell products that you can no longer afford at double happiness.
Without labor there profit margins are zero.
Unskilled labor has never been valuable, and you can't assign value based on cringe "social justice" ideas.
I was a 6 year Starbucks vet. This is 100% truth!!! The relationships are the best thing about my time at Starbucks. But ya over time working at bare boned stores was dumb af and if 1 person calls out that fucks everything up. Luckily, the county I was at had the minimum wage at like 20 or something so I was making 21 or 22 when I left and I worked Monday to Friday opening for like 37 hours a week. But not everyone was so fortunate.
They threw socially responsible when they started to illegally bust unions. I really don't know know why there is no mention in this video of the 20 billion in stock buybacks planned over the next several years. Seems that would be relevant to this subject.
Yes or the high management payouts and bonusses, i would also have loved some quotes or insights from workers.
Stock buybacks are just a way to goose stock price in the absence of real growth. Ultimately, their problem is the drop in profit margins that unionization would bring.
How are unions illegal?
@@santobarca5 They aren't. Starbucks illegally tries to bust them
@@jimbarino2 They could spend the buyback money on workers.
There is something so beautifully hilarious about how Starbucks has to pay its employees subpar wages in order to seem like a progressive, forward thinking company that *wouldn't* pay its employe- sorry, I mean "partners" subpar wages.
15 bucks an hour is sub par?
@@pierrex3226 Given inflation over the past 3 years and the employee shortage resulting in massively increased workload, yes, absolutely it is subpar.
‘Subpar’ yet they have the choice to leave but don’t 😮
Many people would jump at the chance to work in an air conditioned and only have to serve coffee for 15 dollars an hour. You need a reality check.
@@USA-qm2bk Why leave when you can fight for better instead? Starbucks doesn't work without workers and not just those in the stores.
If Starbucks can’t survive as a unionized store then I guess we have progressed past the need for Starbucks.
....So you would rather all of its employees lose their jobs?
I would have actually put more emphasis on why Unions really stepped up as the option so many employees needed, instead of leaving us with the ‘low skilled worker’ moment from earlier. As the modifications grow and the pressures for drive times mount to 40 second and lower window times, the labor has turned from one of pressing a button on a 2010 automated coffee machine to one of a skilled, fast, highly mobile worker. They also had to go down to skeleton crews. The labor slashes are unbelievable. Under 400 hours of labor for an average store per week, often significantly lower. Try juggling 20-30 employees with that, with openings often earlier than 6am and later than 8 or 9. That’s skeleton crew hardcore. So now one barista has to do the job of 3, and the store manager has to do the job of every person they employ.
Next, add in hypocritical leadership who use corporate jargon to pressure managers into making crackdowns on people to improve profit margins while infringing on their people. Slashing hours last minute without notice, going directly against federal and state guidelines. Not making repairs. Slashing all hours for clean play shifts to maintain health and safety standards in stores. Writing up employees who stay late to ensure all tasks are done since they didn’t have the people to handle rushes close to shutting their doors that night. Temperatures can regularly reach into the 90’s, with no stores able to control their own thermostats. Seattle/corporate headquarters does that. The New York stores had bee infestations that were reported to multiple high levels of management but it wasn’t a priority and they kept endangering customers and workers, and choosing to save money on repairs and orkin visits just to increase the P&L in the store.
They regularly slash hours as well to remove tenured workers, thereby removing the largest partakers in their more expensive benefits programs, and getting rid of the workers who attained the highest wages due to multi year raises even as low as 11 cents a year. It’s crazy. That was my raise one year as a shift manager. 11 cents. I was outraged. Tenured workers are also the ones most likely to want to unionize because they remember when they were treated with dignity instead of disposable chattel to toss shit in a cup in 45 seconds or termination. Then they slash the hours of the part timers so that they make less than the required 20 hours to receive benefits at all. And then they encourage managers to fire those not meeting 12 hours a week. But when you cut a store with 30 employees post crackdown to 380 or less hours, you now have to choose between the part timers who can more easily find another job, or the full timers who have rent to pay and kids to feed. It’s super super difficult, and starbucks acts like they have the moral high ground still, and provide a family environment.
Unless you get a store manager that fights against this at the risk of their job, their head on the chopping block the second they have a single underperforming week, you’re getting shit on, laws broken concerning your wages and your schedule, and constantly in fear of easy replacement at the drop of a hat.
Seen from the inside, it’s way worse than this video shows. It’s a rotting corpse on the inside, consumed by Kevin Johnson and left to bloat by Schultz after his latest return.
Basically sums up how I felt when I worked in Starbucks. We had so few people I was regularly running 13 hour shifts alone and had one part timer to close. Then we might have been graced with enough hours to get a second person into the new drink rollouts. If I could have gotten one more full shift a day our building would have been immaculate and and we would have seen our daily take easily go over our 7k average. We would have spent a considerable amount less on training too as we wouldn't loose workers every single time rent in the area went up.
Haven't seen any other of this guy's videos but honestly just based on his channel name and attitude in this one he seems like the kind of person that believes in the exceptionalism propaganda from these CEOs that they make or break the company and every single employee under them is irrelevant.
The reality is that the top management in Starbucks has been so out of touch for so long with what actual business in their locations looks like they basically have as much understanding of the work on the ground floor as say the CEO of an animal feed company would have of a Starbucks location.
it really goes to show you that a bottom-down approach where you do not give individual stores the power to make changes is inherently unsustainable. There is a limit to what one human being can do, and the one human being at the top will never understand the ins-and-outs and subtle nuances of each of the 39,000 stores. It's just too much information, and thinking you have the right to dictate the way they operate is just arrogance.
When he showed those charts, I was like WTF this is supposed to be easy to learn with every drink carefully choreographed, and that is before customization
'Unskilled labor' doesn't exist. Even the most straight forward jobs require practice and thought if you want them done correctly. Shit like that was made up by assholes just like Shultz as an excuse to underpay workers. We really need to go back to the French method of dealing with people like him
Uh yeah I worked as a shift supervisor ten years ago and I can personally say that I've never had a good experience with corporate Starbucks. I never felt appreciated or valued, everything they do felt very "smoke and mirrors", and my coworkers felt the same way. Things like being called "partners" instead of "employees" since everybody got like 2 cents a year in company stock. They do these to sounds nice and progressive when in reality I'd make more from a 5¢ raise than the bonuses.
On a personal level it wasn't better. I worked with a young kid for about a year, we closed together 5 nights a week. Nobody knew, but he was struggling and tragically took his own life one afternoon when he was supposed to be at work. He shot himself in the head. I'll never forget the feeling I got in my stomach when I found out why he didn't pick up when I called to ask where he was at when he didn't show up to his shift. Once word broke and we figured out what happened, I called the district manager to tell her I was shutting down because everyone on shift was crying. On top of just... Being human and letting us grieve, we weren't going to be able to provide service with a smile after that. She told me that was absolutely unacceptable and hung up. I got a call from the store manager 5 minutes after also telling me it was unacceptable to close. So I turned my emotions off and sent my crew home, running the store by myself until close. I was written up the next day for sending them home as there's supposed to be two people in the store at all times. Needless to say, I quit after that and never went back.
All of this is on top of permanently running skeleton crews, low pay, and general bullshit that every fast food worker deals with.
Anyone who thinks Starbucks is any different or better than other fast food companies are under a delusion. It's been bad for at least a decade, but I suspect longer.
I had to do a 4 year degree and then a bunch of courses on top of that to be treated with respect and make good money. You deserve to be treated exactly how you were.
@@Kage-jk4pjClearly you missed out on the point of your humanities Gen Eds. Every person deserves unconditional respect of their rights and access to equal opportunity because it increases the subjective value of all our lives. You might be respected for you economic output, but start spewing your ignorant and selfish ideas and you’ll quickly lose the respect of most any person you talk to; college degree or not.
It would have been interesting to see a bit more of a macro view with regards to the economic situation Starbucks was in over the period of time evaluated for the figures. Like how much they received in covid relief, how much they increased profits as a reaction to inflation, what if any bonuses or stock buy backs were made by executives etc. I think this would have been helpful to determine if Starbucks truly couldn’t survive this wage increase, or if they couldn’t survive it because like every other corporation they didn’t practice good stewardship to weather the economic storm and instead, insulated shareholders, and tried to pass the reckoning off to consumers and employees to just suck up and take the hit.
There have been substantial stock buybacks starting with 191 million in the first quarter of this year...with a lot more planned.
The math in the video makes alot of assumptions, and I'd assume a $5 bump in employee pay won't destroy their margins....
But still, the point is the same: Starbucks sold itself as a new company innovating the business model, when in fact it's just another corporate restaurant chain
@@nuance9000 They have the same basic issues far as I can tell so how are they going to offer anything without huge profits? More than one UA-camr (far as I know) sold their stocks that did not continue to provide dividends....
This video showcases how fragile this entire system is, and that we are all collectively living on economically borrowed time.
That is why countries with best quality of life tend to have the largest debts.
There are few exceptions of course like Nordic countries but that is because they have very small population relatively to their landmass.
You can't be a socially responsible company when you take advantage of your workers.
You can't be a socially responsible company, full stop. They are only good when they are made to be good by laws.
Companies should not be the "good guy" to theirs workers.
Don't like? Leave it. We only chnage our mind when we pass from a "worker" to a "investor" and begin to understand when We start a company to make MONEY not to be a NGO.
I don't know how Unions are on USA, but here outside they're a nest for lazy corrupted leftoid.
it’s impossible for a modern corporation to exist without taking advantage of their workers. it’s just how it works these days. erosion of unions and worker rights since the reagan era is what got us to this mess.
No one's forcing them to work there.
If they want better pay, they can go get jobs that are harder to do, than something a bored sixteen-year old can master, in-between making tiktoks and talking to their friends...
@@NotKimiRaikkonen dunno if you understand how the modern world works, my dude. when all of the other jobs available at your skill level are equally shit and you will likely be homeless if you quit, your choices are kind of stripped away. not to mention the loss of healthcare and delay of getting new benefits when getting a new job.
People now say things like "if you don't like it, leave". That's always the solution. We never expect anyone to advocate for a better, more economically reasonable experience for consumers and workers. It's about time to get back to that.
Former starbucks barista here, one of the first things they tell us is that we’re aren’t Starbuck employees, we’re Starbucks “partners” because we’re one big happy coffee community. As if we aren’t service workers being worked to exhaustion and having to deal with rude customers all day under a mega corpo. Funny how the sense of community evaporates when we demand common and decent worker rights.
Support local coffee shops, if you can. :)
Worked to “exhaustion” at a STARBUCKS LMFAOOO 😂😂😂the world is way too soft nowadays
@@jdan6122 Spoken like someone who has never worked outside of an office.
@@jdan6122 as a human who talks to service workers I can attest they’re often overworked and underpaid, whether they work at grocery stores, restaurants or elsewhere, may not be consumers’ fault but the least we can do is to be nice, treat them as humans and appreciate their work.
Hope y’all get unions and fair wages and benefits!
@@jdan6122 as a software engineer who makes easily over quadruple what they make while working at the very same Starbucks. I see them every day. they work hard are definitely underpaid for the value they are producing. pay these people more
@@peterdecroos1654 That reason why you get paid more is because you have skills that are rare and take time, investment, and hard work to develop.
The argument shouldn't be weither Starbucks workers work "hard", but rather, if the skills they possess are rare, valuable, and difficult to replace. Their pay reflects that.
Every business channel sets ads to the maximum setting, not realizing it makes people leave early
The way they treat their employees is like how you would treat a dog that you don't really like but have only to show your friends that you're a caring, respectful and responsible person. Actually tragic how they let their best employees go instead of digesting the concerns and addressing the growing issues they face as a corporation.
Every time customers are mentioned, he really means American customers. The rest of world already had coffee.
It's a bit amusing to see the video talking about how Starbucks invented a diverse range of coffee drinks in the 1980s when these drinks already existed in the 19th century.
@@alec16 have you heard of a cappuccino? Starbucks brought several foreign drinks you're probably familiar with to the American market
Starbucks has become the "target" of coffee and cafes. Upping the stars needed for rewards was the final straw for me, ill be buying from local cafes with personal touches from now on.
Same. I wasn't loyal to them and I like going to local cafes, but I did enjoy getting the rewards and regularly ordering from them. The new reward levels just made it feel like they are wringing every cent out of you, meanwhile the stores are just getting messier and less pleasant. So unless I'm given a gift card I don't even think about Starbucks.
The thing I didn't quite understand was outlined in another comment, that the drop in profit margins could have compounding effects. It's probably also important to note that those are hypothesised effects, and it's unclear if they would actually happen or not. Those being: their ability to sell stuff for the markups that they command is totally dependent on their brand image. So, if the brand is seen as not being worth as much, then customers might not be willing to pay the same markups.
But, I don't know. It seems like the very public union battle could have the same effect, right? Investors aren't the ones buying retail drinks, and retail customers aren't looking at profit margins. But the retail customers would be more likely to have read about the union busting (even if most wouldn't care).
It all is very uncertain, but it just seems like the public battle could have similar damaging effects as taking the union demands at face value. It seems like they should've just negotiated from the start, but I don't know. Obviously there are more factors at play, and a lot more information that they don't share in the public reports that might be influencing this decision
Starbucks would be running into a lot fewer of these issues with unions if they redefined their labor practices on a corporate level. The things that kind of skated by mention in this video but is most important is not that the wage is totally unreasonable at Starbucks locations, but that their corporate restaurants are encouraged to overhire and then under schedule all of their employees shy of 25 hours/wk. This allows Starbucks to “provide healthcare to all workers” but hold all but a few workers below the full time wage threshold, which pushes most of the healthcare costs onto the employee and off of the business. I have a feeling that if people felt like they could consistently rely on getting 30 hrs/wk if they were a good worker then Starbucks would have a lot fewer demands to deal with and a much easier negotiation route to avoid unionization.
I'm still angry that Teavana was closed down because of Starbucks. It was my favorite place to get tea because I could sample it in the store.
Like, I know that there are better places to get tea, but Teavana was accessible.
Worked for Starbux back in 2008 it wasn’t a coffee company, it was a pastry and milkshake company…
Starbucks doesn't seem to be doing so great in Washington or Oregon anymore. They bought out every independant cafe that crossed their path in the 00s & now they're getting absolutely crushed by Dutch Brothers.
Any coffee place who doesn't have lavender & Irish cream on the flavor list isn't getting a penny from me.
Remember the Paradise Fire in California that burnt down a whole town? Starbuck rival Dutch Brothers offered to find employment & housing for everyone from Paradise.
Sadly Dutch bros makes trash coffee
Dutch bros is nasty tbh
Starbucks does have Irish cream syrup now. It came out last winter I think. I honestly though lavender or rose would have been this summers flavor, but we got macadamia instead.
Great news!
As you say, zoomers & millenials are 80% of Starbucks' customer base now. I don't have any data, but I have a hunch many millenials, and a majority of Gen Z, actively support the unionization efforts' and probably find the current Starbucks media representation as traditional, scorched-earth, and union-busting. This characterization is a lot more damaging to my eyes than being seen as a legacy food service brand, because at this point that's kind of what Starbucks is. Who will they turn to if they alienate all the young people from their customer base?
Did you miss the part about Starbucks caring more about what their profit margin looks like to shareholders and investors than about their image in the eyes of their customers?
Unfortunately, Starbucks holds such a monopoly in many parts of American (suburbs particularly) that they don't really need to practice ethical business practices to stay afloat at this point. All this social responsibility fluff is just so some of the execs can pat themselves on the back in addition to receiving their paychecks that are 2000x more than the average Starbucks employee
@@LafayetteCCurtis Bro I'm not arguing with anyone naming themselves after long-dead Roman emperors 💀💀💀
right? The amount of grift in this economy is frighting. if you can take what is maybe $0.12 worth of cup, and maybe $0.17 worth of coffee and charge north of $5 for that cup you can afford to pay your employees better.
@@lazyporcupine2360 I agree! the employees in columbia picking the beans for $2 an hour need to unionize and get paid more!
I used to work at a starbucks yet my one pet peeve with the company is that, they pride themselves for their service yet only pays the employee's minimum wage. Other companies does this as well but sometimes I wonder, what do they do to compensate for the extra service that the employees are expected to provide?
Great video, interesting to see that when it's all said and done it's all about the numbers. Lip service to social responsibility etc falls apart when it's not on the CEO's terms. Only worker cooperatives can truly have the worker's best interests at heart.
Thank you for your support and generosity, MrDirzel!
It's unbelievable to me how condescending it is for them to call their employees "partners" while treating them like numbers. It's so insulting that they seem to think their employees won't be able to see right through that, and it shows how little they really think of them.
As the observation goes, they'll spend untold millions to avoid shelling out thousands to workers. And I'd add, Amazon hiring Pinkertons for union busting isnt exactly subtle either.
Thousands per worker*
It absolutely makes financial sense for these businesses to spend millions to avoid that pay raise because it quickly adds up over the total workforce.
@@chinguunerdenebadrakh7022 if you cant afford your workforce, then you have no business being in business. Exploitative conditions perpetuating and using vast company resources (the untold millions) to keep the exploitative conditions present is a really bad look dude. Really surprised you're trying to genuinely stick up for this practice.
Also, that doesnt change the fact that on average, these companies are paying more and risking a lot more with the union busting tactics than they would lose by just negotiating as is the worker's rights. Instead, they're spending on the union busting *and* conceding to unions in the long run not to mention really steep fines for breaking laws. Seems rather fiscally irresponsible to me.
@@DGPHolyHandgrenade read my words. I didn't say it was a good thing, I said it made absolute financial sense. It can make financial sense to make heroin and sell it, that doesn't mean I'm saying it's a great, ethical thing to do. And for the record, I am for unions.
If you've been paying attention to labor movements for the past half century, union busting absolutely pays off. Union membership halved in USA from 1983 to 2020. Union regulation has been laxed (by legislators in pockets of union busting lobbyists). Why do you think US unions so little power compared to say ones in France or Germany? Because companies have been union busting more aggressively (not necessarily cuz US companies are more greedy, their regulatory framework is just looser on this). Have you even seen the attitude towards unions in some places. It's negative af. Where does that come from? Obviously lobbyist cooked propaganda at work places where they tell you union fees are too much and will give you nothing. This has absolutely paid off financially.
Btw, Coca Cola spent about 630,000 dollars on union busting in a year. Is that REALLY a massive expense? They make 20 billion USD in profits every year, 630,000 is nothing. And in exchange, they suppress the pay and working conditions of +80,000 employees. More than worth it financially.
And no, companies aren't conceding voluntarily. They are often pre-emptively firing employees with unionizing attempts and only conceding when there's no other alternative.
@@chinguunerdenebadrakh7022 he literally proved in the video they can not only afford it, they would just have to take less profit in the form of lower margins 😂 and not even that much… 14% to 10%… You’re a propagandized serf.
Amazon’s workplace is orders of magnitude worse than Starbucks’
A cheerleading video for Starbucks, finally coming to it's conclusion at 27 that if Starbucks allows unions, it's profits will drop slightly and then it will lose it's image and look like any other retail food service company, ie Chipotle
If you need to limit your employee’s rights and stomp on their well-being to succeed, you shouldn’t be allowed to succeed
If you need to form a labor market cartel and extort your employer in order to get a raise, you are a pathetic worker and deserve nothing.
well said!
This is why sectoral bargaining is such a critical idea for service sector unions. A place like Starbucks isn’t incentived to unionize out of a fear that a non union shop will beat them on costs.
Sectoral bargaining eliminates that issue because most shops and workers
will negotiate a price for labour.
This is always tough to analyze, most ppl admire what Starbucks is as a brand, how they transformed an everyday product into high margin, high end brand. It’s sad Howard has taken this approach to his workers, I try to stay away as much as possible, but too many ppl ignore how they treat their employees! Another great, insightful video 👍
Corporations will bribe failing CEOs with billion of dollars to leave the company but refuse to give employees higher wages.
If the employee's are too stupid to quit, they deserve to be treated however the owner sees fit.
@@RyuuOujiXS Or they could form unions to make their jobs better. The culture of "just quit if you don't like it" causes everybody to be worse off but the CEO. There's not enough honest to God good jobs out there for everybody to have one so it is up to us to make these places great to work at.
And then someone turns around telling me that capitalism makes things cheaper. Which. Sometimes. Not this time though. I hate so much about this world. I can get a convenient salad at the supermarket. But. There's no benches anywhere. Parking spots sure. The only table i could sit down at without buying something is in the park.
@@TheModdedwarfare3Starbucks was a good job for me when I was in high school/early college. Better than minimum wage, tips, not too stressful, free coffee, free meals, stock options(it was like 2 shares but still cool) free Arizona state university, free pound of coffee per week(I used it to get free VIP parking at a local bank) low tier 401k. It’s really a pretty decent deal for 16-20yo if you take advantage of it all. The only main gripe I had with Starbucks is they tried to schedule me to opening shifts after a closing one. I just told my manager that I wanted a consistent schedule 6am-12pm, 4 days, same days, and they obliged.
If a business can’t survive when forced to treat their workers right… maybe that business shouldn’t exist.
Edit: finished the video and apparently Starbucks would survive just fine. Just slightly more margin going back to workers instead of investors. Seems fine to me 🤷The workers are the ones actually creating most of the value.
@@thealienrobotanthropologist Yep! Other workers like food suppliers, coffee farmers, even the workers building the retail stores contribute too. But without the workers there would be no Starbucks.
@@thealienrobotanthropologist According to MArx, maybe. But not according to the current economic consensus.
@@ross4 There are multiple factors of production. Without capital or entrepreneurship there also would be no Starbucks.
They seem to have money for Howard to buy back 191 million worth of stock in the first quarter of 2023 with plans to buy back 20 billion over the next several years...I call BS on this video for that one reason. It's information that isn't that hard to find either.
@@user-rh3pe7um8d Right, without that huge amount of capital there would be local entrepreneurs who work and own small businesses… the coffee shops Starbucks killed so many of.
Dude, I’ve been watching this video for almost 3/4 in and we haven’t gotten to the Union part…
Jeah also no mention of bonusses and stock buybacks a little dissapointing.
He is an mba afterall 😂
"there is not a coffee company with our ability behind the counter in terms of flavors, syrups, modifiers, foam". Maybe cause they make, idk, coffee?
they'd only shed 4% profit to give their empolyees a decent wage. If a company can't pay its workers then maybe it shouldn't exist
if you ran a public company, that 4% profit margin has a huge impact on your stock price....we live in a capitalistic world where companies focus on the short term (how's the stock price this quarter? this year?)...4% difference in profit margin is huge
@@DavidJones-pv8zz I. Don't. Care. If a company can't afford to pay their employees then the company should go broke
Yeah Starbucks could pay every employee $20/hr today with changing nothing else, and still maintain double digit profit margins.
@DavidJones-pv8zz OHH! Will someone think of the share holders! They are the real ones struggling to make end meet in a cost of living crisis
It can afford 1.4 billion but that's a very big cut to make. Which is why they're fighting like hell to stop it
It’s amazing that Starbucks - Union-crushing Starbucks - is kind of used as a shorthand for “leftist” by a lot of pundits and politicians on the right.
Most of these leftist bashers have no concept of political theory and operate entirely on a primal wannabe bourgeois or lumpen frame of view
That's because they're fundamentally Leftist in principle. Left has NOTHING to do with the culture war and everything to do with workers rights.
Stop buying from Starbucks.
I stopped buying from Starbucks because it got too expensive. I won't go back if they unionize. Going to Starbucks will be like going to the DMV. They won't be able to fire bad or lazy employees because of union intransigence. I know for a FACT that unionized workers cannot be fired for anything less than committing a felony on the job. Prices will double as the union will demand the sky. Unions will destroy Starbucks like unions have destroyed other industries, e.g., airline and automotive.
No
no way consumers don’t care the causes but the prices and values which provide with quality of life , even black people can hold a cup of starbuck which instant make a black innocent
sadly i don’t think brittany from bumfk ohio cares🤣 she will continue sipping those 500-calorie $7 frappuchinos happily along with all her friends
It's truly bad. Why do americans like it so much? The worst coffee.
"You see where this line meets this line? That's why no workers should be able to pay their rent."
This idea of infinite growth forever is both a fantasy for 99% of companies and is making the world a far worse place.
Wrong, also the issue is inflation. Not cause it's high lately, no, because it exists at all.
We need a return to a deflationary monitory system like how gold use to be. Maybe in the modern world this is with a private crypto like Monero. But that is the root of all these issues.
@@WitchMedusa Yes, I'm sure if inflation was under control and crypto was less of a joke, the sugary coffee company could achieve their goal of growing infinitely and looking cutting edge forever.
@@WitchMedusa starbucks galactic empire when?
Ya right, crypto that thing that is useless unless you are a money launderer😂
@@columbo47 Monero is one of the better cryptocurrencies out there.
Bitcoin (BTC) that everyone has heard about was captured by banking interests in 2014-2017. Scaling to meet expected transaction demand was blocked. Converting it from deflationary money to a ponzi-adjacent collectable.
Question: Why no mention of the $25 million deal Pre-IPO with Square ($SQ) now renamed as Block? - They did the deal in 2012, the IPO for Square was in 2015. It was an innovated part of the Starbucks rewards app. The amount of finance transactions that take place in the "Bank of Starbucks" as gift cards, points, cash-less tips, etc was a huge deal to move money around quickly.
There is a universe where baristas of today don’t exist because without Schultz’s business they don’t have a place to exist. I bet Schultz sees it that way. One thing he did was turn cheap labor (arbitrary drink mixing) into non cheap labor (non arbitrary drink mixing). He calls Starbucks “retail” but “can I have that same shirt in large” is much easier than the normal Starbucks order.
I completely an wholeheartedly disagree with anyone implying being a Starbucks barista is a difficult job in any way- and I work as a Starbucks barista. The standard of work people hold themselves to has dropped to the floor. Sure, most Starbucks prevent you from being high as balls every shift like most fast food workers are, but that’s no reason to pretend this shit is difficult
First, SB should scale way back in Europe, to only what’s profitable (read, tourist areas). They can’t compete on quality or price when you can get a better cappuccino at a truck stop for less money. Besides, Europe still has national worker protections which the US and Asia lack. SB is an older well known company, time to stop promising shareholders unrealistic growth. SB will lose to the drive to unionize. If they work with unions now, they will lose less in contract negotiations and in public opinion. The public health crisis & 2008 changed everything for a generation. And this generation has access to real information, 10 years of virtue washing can be wiped away with a few TikTok posts. If you want to be seen as a beneficial market leader, you actually have to be one.
One hour of work they can’t pay for some of those drinks.
All of this to say that SB would have to earn 10% marginal profit instead of 14% to pay their workers a decent wage.
The thumbnail and title are extremely stupid
The title of this video is ridiculous. Starbucks would “survive” just fine with unionized workers, it’s just that investors and executives might take a bit less of the profits. (How awful 🙄)
Why do you care? If you're not happy with what they pay then leave. Like I have no idea how someones identity could be so intermeshed with their employment that they feel the need to "fight" for a union.
In my experience, people who care about unions are losers with no life outside work or those who just want to complain all day.
@@WitchMedusa Because some people actually care about making their workplace better for everyone, rather than just quitting. Someone is going to be working these jobs no matter what. I have a lot of respect for them trying to improve things for future workers!
@@WitchMedusa what? I want a higher wage so I have more money and therefore more time to do other things because I don’t need to be constantly working
It's not just the margins, EV would drop like a stone when everyone reads the news and rush to sell Starbucks stock. In the eyes of every shareholder, nothing good can come from unions
16 mins out of 29 and I haven’t heard about the union busting.
So the only way to remain a "socially responsible" business is to crush unionization? That is some 1984-level ideological absurdity there.
Have you read and understood 1984? Because union-busting has nothing to do with that book.
@@drzerogi He's saying it's some slavery is freedom logic on account of them curtailing worker unions in the name of the workers.
@@drzerogi Umm... I know that. I was thinking of the intrinsically absurd ideological distortions the book talks about, as in "Freedom is Slavery" and "War is Peace". I find "union-busting is socially responsible business" about just as dystopian and illogical.
Someone think of the shareholders , poor guys investing money and then only see a lower amount very disheartening.
Like those saying they should get paid shit because everyone can do it, but that logic is stupid to me, because if everyone can do it why don’t everyone drink from household coffee machines, and coffee shops aren’t dead, also we really saw who was really needed for a functional world during the pandemic, if that how he live know 90% of works would not exist.
I recently started a job in the autoglass industry. Turns out, my district manager was one of their union busting scapegoats. She got fired and brought a bunch of her Starbucks buddies to my company.
Reading about the efforts to unionize the Steel Industry between the 1880s and the 1940s, you see the same action. Steel workers, even before unionization, were among the highest paid workers. The problem was work schedules (no over time, 12 hour work days AND requirement to work eight 12 hour work days a week, yes that meant a worker had to work 24 hours AND still work 12 hours a day the other six days of the week, no notice to be laid off from work, no medical treatment, even if injured on the job). Carnegie always said his workers were the key to his success and said he took care of them, but fought efforts at unionization to the max. Just because someone has some progressive ideas (In the case of Carnegie free public libraries) does not mean they will not use whatever is "legal" to prevent unionization.
Excellent and thorough analysis as always. You make an exceptionally clear point on how much of this is smoke and mirrors, and it makes me wonder whether we would be in this spot today if the previous CEO had not sold off the CPG segment for an immediate payout, which would increase margins and give more wiggle room for unions to exist.
Thank you for the kind words. You always pick up on the more subtle points woven throughout each episode - not sure others have connected the dots between the CPG business, margins / growth pressures, and overarching labor narrative like you have.
@@ModernMBA That's because most of the comment section is sadly just parroting the same statement over and over "If they can't afford to pay X in wages, they shouldn't exist". Starbucks with the CPG business still would definitely have been a little more "union proof", but over time with net profits shrinking, that's when you see them stuck with the choice of, "Do we continue to be this forward moving socially progressive company being able to afford ethically sourced materials?" or "Do we cut into our profits to pay for these wages, and source materials like everyone else?".
Too many in the comments think you can do both without breaking a sweat.
They could have even expanded the margins with this CPG stuff in the pandemic, I imagine their regular customers in china and USA would have flown to it like bees to honey
That's the problem with capitalism as it practically exists today -- CEOs are incentivized to make short-term decisions that hurt the companies in the long term.
Unions actually work for us the middle class. Look at union trade workers making 30 plus an hour.
While most people still make 10-15 an hr.
I remember when i was 13 or 14 i would order starbucks when i was with my friends and i remember it being expensive then, but being young and stupid makes you ignore that for a while. I think as gen z grows older, starbucks will see declining sales
Something that isn't mentioned about China but critical is that Starbucks' growth in China has actually slowed massively in recent years due to competitive pressures from up and coming players such as Luckin Coffee, as well as disruptions caused by the pandemic. This means Starbucks could no longer rely on China to be its growth engine, and had to return to relying on North America for increasing profits. But with NA already so saturated, there isn't much room left to grow revenue, thus they could only turn to cost-based approaches such as the anti-unionising efforts we currently see. I made a video talking about Starbucks' downfall and Luckin's rise in China due to differences in business strategy, product innovation and effects from pandemic disruptions, might be useful to you.
Who can blame China for promoting domestic companies.
It's almost as if demanding exponentially increasing profits in a universe where scarcity exists just isn't realistic.
Here’s a sentence that destroys any argument on why star bucks should not unionize.
“If you can not afford to pay your workers a living wage then you should not be in business.”
A lot of this seems to come back to the fact that the two CEOs who aren't Schultz have actively gone against the fundamentals that Schultz used to build the business to begin with. Were those moves being made in pursuit of allaying shareholder concerns, or is it just catastrophically different ideas about the future of the business? When you said that Schultz was leaving and handing off the reins to his COO, I thought it'd mean less of a sudden course change than the last time he left, but then you immediately led into the selloff of the CPG business, which seems fundamentally antithetical to what Schultz was trying to do. Do we have any idea what's behind this higgledy-piggledgy approach across CEOs?
It's great that you picked up on this. If we read between the lines on the stories that have come out since Kevin Johnson's departure / Howard Schultz forcing his way back in, there was clearly bad blood between the two men. There are rumors that like with Bob Iger and Disney, Howard even after stepping away in 2018 continued to issue orders and influence company direction behind Kevin's back.
Kevin never wanted to leave and the whole "family" excuse is a common trope, but the board clearly sided with Howard given his prehistory with Starbucks. The direction that Starbucks took under Kevin is so strangely different from Howard's, which is even weirder given that Kevin was Howard's own hand-picked / long-groomed successor. It's impossible to figure out what actually happened and what parts are standard corporate character-assassination / reputation laundering in the press until more information comes to light. Hence, it was intentional to just touch on that rabbit hole and leave viewers to connect such dots on their own.
This kind of boardroom drama happens far more frequently at companies that are struggling versus ones that are stable and successful - hence Starbuck's greater recent emphasis to preserve its optics against unions, for investors, and by extension, to customers.
There’s some pretty large discrepancies in the math here.
1) The number used In the video to describe worker wages didn’t factor that it was for wages AND benefits, which the benefits half would actually go down, not up, because the amount paid for by the employees goes up since benefit witholdings are a percentage of wages.
2) a large chunk of those wages is not going to be increased at all by a $20 p/hr starting wage because it’s the compensation of employees such as executives, managers, and GMs who all make substantially more than 20 an hour already.
3) starbucks margins are lower than they should be because starbucks owns way too many corporate locations which have much lower margins than franchises. Most companies at Starbucks scale have almost no corporate owned locations or are actively transitioning to a 100% franchised strategy, which raises margins.
It’s unreasonable and not mathematically sound to say raising wages would impact margins as much as this video states.
It would be interesting to see what you deem to be mathematically sound. There is always subjectivity and assumptions in hypotheticals.
1. Employers spend on average ~$7,000 per employee on benefits (assuming single coverage). Starbucks doesn't specify of its 248,000 retail workers in the United States, how many were part-time, how many were full-time, and how many qualified for benefits. If we assume that all 248,000 workers were full-time employees with single coverage, total benefits would have cost $1.7B. $1.7B in benefits would be 20%, not "half" of the $8.1B paid out in total wages and benefits.
2. You might be overestimating the number of managers / GMs and their wages. The unions are demanding $20 per hour as the starting minimum with higher rates depending on tenure and position. A shift supervisor would have a minimum wage of $25.40 an hour. Based on LinkedIn, there are currently ~2,500 district managers and ~2,500 GMs working in the US. The average nationwide salary for a district manager is ~$70K and for a GM it's ~$95K.
By volume, 5,000 managers + GMs combined represent just 2% of the 248,000 retail workers in the US. The remaining 200,000+ employees (we can say 90% if you want to be conservative) are frontline hourly baristas. Lastly, managers and GMs are salaried positions. Baristas are hourly. The union's are not just asking for $3-5 more per hour but also guaranteed 37-hour work weeks. The combined impact of higher minimum hours and higher minimum wages should not be understated.
3. Starbuck's margins are not "lower than what they should be." They are low because that is how the company has built itself over the past 40 years. As explained in the licensing segment, it was an deliberate decision by the company give up margins in exchange for control and not follow a conventional franchise model. From Howard's perspective, control is more important to Starbucks than profits - protecting the brand and maintaining the store experience at scale has been critical to justifying Starbuck's premium positioning and establishing high WTP from consumers around the world.
4. As mentioned and visualized, even if the projections are wildly over the mark and you cut the estimate by 50%, the operating margin goes down by 2%. Starbucks wouldn't let it come to this, which is why anecdotally, baristas nowadays have reported it's getting harder to get more hours despite being paid $17 / hour. The projections are not designed to be a magic calculation of the future but a demonstration of how much is at stake.
Starbucks makes it difficult for outsiders to piece together its economics for this very reason. They recently started blending Asia and Europe together to disguise Europe and China's underperformance within the greater international business.
If anything about the crazy prices of eggs and other low margin food products has shown us this last year is that there is less price elasticity than was assumed. So why can't Starbucks pass on all of the added labor costs for US unionization to the US customer? I'm surprised they haven't already raised prices and blamed unions for it, whether they were responsible for the increase or not. And since when is maintaining margins justification for violating the law? A company that is not only accused of, but found guilty of, multiple NLRB violations, doesn't deserve to have a respected corporate image.
That's not a solution. That will only give the competition the ability to take on more of Starbucks market share.
To make the fact about the really low wages paid in asia worse, the prices they charge in their branches there were adjusted to match US prices(I realized this during my visit the Philippines this year). I understand the import fees and taxes but they could atleast make an effort to closely match the wages that US employees get.
Really? As a Filipino I've always viewed Starbucks as prohibitively expensive, but I wouldn't have thought that they're on par with US prices now.
@@spartanB0292 good thing it don't affect poor folks like me drinking instant haha! Let the middle class spend their money on the social status coffee.
You think starbux introduced coffee to the masses? Wtf?
I'm glad Starbuck's never really caught on here in Australia. The closest we have to a Starbucks is Coffee Club but you'll often find one or two other independent cafes nearby and just as full.
Introduced coffee to the masses? You're absolutely crazy my man
So they could appease unions but they want to make more profit than less? Or to personify the company, they don't want to face that they have achieved much of their growth already so have stuck their head into the ground; they want to maintain high growth operating margins when they are now a matured, lower growth firm?
People ignore the fact that if they are revalued from high growth to low, the shares can dip as much as 40%(though a more reasonable is 15-20%) as well as not beating the market growth rate of 10%. This is important since peoples pensions are retirements are tied into it, and while it’s easy for some to say “hur dur greedy corpo” and yes greed is involved, it’s also telling the old lady with 700-800k saved and ready to retire that now it’s 400-500k, after decades.
@@markjacobs3232 why didn't grandma diversify her portfolio? the working class are starving and at risk of losing their homes, but grandma's early retirement is more important?
I would argue that almost no grandma has put 800 K in starbucks stock. Also maybe the ability for people to retire should not be tied to the stock market.
@@markjacobs3232 that's a problem with retirement accounts and the way they are structured, which everyday workers do not need to solve. That is a government problem.
@@markjacobs3232 valid point. You have probably explained the essence of why they have acted in this way - but instead of grandma, it is likely their own compensation they are worried about (thus this is why they are acting, but it has the side effect of affecting grandma). Not saying there aren't circumstances like the one you mentioned but I think it's predominantly the "greed" you mention.
I think "greed" has negative connotations and has become emotionally charged. I prefer a different term. My term is rather egoism, which is what is "rational" in that circumstance (in that it is instrumental to maximize one's material possession...). These people waffling on about greed would do the same thing - it is just envy they don't have the opportunity, or because they have been adversely affected (not to say their action is right). But, the institutions facilitate this way of acting, so people will act in that way; no point pottering on about how someone has done something that is allowed. Instead, we should try change the rules...
Very thoughtful commentary… quick question though:
When we are talking about the image of Starbucks suffering with a few percentage point dip in operating margin… we are talking about the image in the eyes of investors and investors only- is that correct?
The brand image to the investors is important… but for a mature business like Starbucks…. A hit to valuation does not strike me as fundamentally disruptive compared to a similar shock to consumer/employee confidence.
I just doubt the average consumer/employees would know or care if operating margin adjusted down to industry standard.
I believe he is talking about the image to the public and politicians. investors don't mind image unless it impacts profits.
a small flux to valuation is normal even for well established blue chip companies but suddenly dropping the operating margins by 4-5% in an industry (food) that's know to have low margins and keeping it there for the upcoming future cause investors to leave (thats comes with its own set of problems)
its not the consumer/ front facing employees job to care about operating margins. but for higher ups who have pay off taxes, interest, have capital reserves for an unforeseen event (covid/hurricans/storms) and a plethora of other things. even small business owners have this mindset for when something breaks/ stolen. hope this was a bit helpful
Not surprised at all! This is the same man who bought the Seattle Sonics and then sold the team to a group formed for the sole purpose of buying an NBA team to move to Oklahoma City. This is after threatening to move the team, if the city and state didn't cough up the money to build him a new Arena. What a piece of ****
This thumbnail blended into my tarot pick a card videos perfectly and I thought it was a Starbucks themed tarot reading at first glance lol 😂
I hope the unions succeed
Amen
Love how this video can't help itself but shit on the required skill to be a good barista. Glad you guys think my job is easy and anyone can do it, really cool thing to say.
I really dislike corporations that brag about their values while at the same time dismanteling worker input
You outline really well why the goal of high profit growth is fundamentally at odds with worker and customer wellbeing. Corporate social responsibility is only ever a hollow marketing tactic, because if these businesses cared about society like they care about continuous profit growth, they would be non profits. Or they would be begging democratic governments to buy them out. In our messed up system, its not enough to be a stable, moderately profitable business offering a reliable service. The top business owners and shareholders enjoy their outsized power and the upper middle class shareholders are terrified of falling into poverty so the vicious cycle goes on...
I don’t I agree that business should be non profit, but I also think that no ceo is worth 200 times more than the lowest paid employee, we should incentive business that prioritize profits without taking from employees to increase those same profits.
> they would be non profits.
*ikea has entered the chat*
"It's not enough to be a stable, moderately profitable business"
This is what gets me about modern businesses. The obsession with constantly increasing profits. I find it so weird that a group of ostensibly rational investors can't realize that the line can't go up forever. It's so bizarre seeing one of the biggest companies in history (Facebook), lose investors because their already astronomical profits stagnated for 3 months out of nearly 2 decades. What kinda crazy world do we live in?
@@chichichichilling4822 exactly, thats the problem, the end goal of capitalism us endless growth first and foremost, and since thats impossible to achieve, the customers amd employes take the hit to continue the growth
In other words, CSR is just a grand exercise in virtue signaling.
As a business model, absolutely love what SB has done. To make bucket loads of cash like they do...... out of coffee, is genius.
However as a consumer, the few times l have consumed their products, l am not sold over...... yet.
If corporations don’t start paying their workers more, Unions are just gonna keep growing more powerful.
Starbucks already pays employees more than most other places. I dont understand why they should pay them more
@@jorgeavelar98 because it's not enough to live on. Those other workers should also be paid more.
@@jorgeavelar98 what are ownership rates of apartments vs houses for 20-30 year olds?
Spoken like someone who is truly economically illiterate.
@@jorgeavelar98 I don’t understand why mediocre CEOs get bribed with billions of dollars to walk away while workers are on food stamps
please keep these videos coming, they're great! :)
We imagined the 2020s with flying cars, conscious robots, space travel, and we got obnoxious stores that sell overpriced coffee and practize good old union busting.
Here in Poland Starbucks succeeded to buy the younger consumers. Most stores are packed with pre-teens and teens.
This video has a very strong smell of Starbucks sponsorship against unions.
well, the channel is called modern "MBA", this is what they learn
@@danh9083 It's pretty anti-union to declare in the title of a video that a company "must crush unions to survive", then conclude the opposite (they'd just be less profitable), but pretend otherwise.
I worked at Starbucks in the late 90s. The worst customers and my coworkers were awful. I never go there for coffee; I can make my own at home. I save money and time in the morning. Coffee is the fastest thing to prepare. Why would someone drive to a place, get out of their car wait in a busy store full of cranky people? Ridiculous.
They are addicted.
Here is an idea. allow unionization, increasing retail workers compensation, and DECREASE executive compensation. Margins stay the same, and Starbucks wins the oscar of social responsibility, bringing closer the reality of fair world.
I think the hit to margins is even more significant than what you calculated because the low wages in Asia skewed your numbers a bit (A lot more than 56% of Starbucks wages were paid in the USA- probably more like 75%). Also, you recalculated wage costs with the average wage being $20, but that would be their MINIMUM wage with a union, so figure average wage more like $28, and you still need to add in benefits and payroll taxes
Don't you sense the irony in that concluding statement? "In order to maintain a forward-thinking image, Starbucks must prevent unionization at all costs." Yet, crushing unions will inevitably deteriorate the company's social capital as a champion for corporate social responsibility that it tries so hard to protect. Starbucks' means to preserve its reputation is actively ruining it.
Im almost certain the concluding statement is one of ironic meaning. It's more so detailing how as a result of the business decisions that Starbucks engaged in; they are now at this loss-loss crossroads where they must fundamentally betray their values.
As Abe Lincoln would have said it if he were around today, "You can gaslight all the people some of the time, and some of the people all of the time, but you can't gaslight everyone forever." Sooner or later it will catch up with you.
i love that it always boils down to "yeah we could pay people what they are owed and still make plenty of money, but then our investors that expect unlimited growth would think we're pussys"
It is always to capital people that businesses worry most about. They need the works but can't pay too much so in order to turn a profit they....
I don’t know about the rest of America but here in Anchorage, AK and surrounding areas, there are independent coffee “shacks” everywhere. Yes, Starbucks is up here, but I prefer the more human interaction of the independent shacks.