🤔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?
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.
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.
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.
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.
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
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?
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.
@@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.
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.
@@Guremien 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.
@@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.
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.
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 :/
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.
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.
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.
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.
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).
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?
@@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 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
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
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...
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.
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.
@@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.
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.
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.
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.
@@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"
@@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).
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.
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.
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.
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.
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.
@@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
@@niceprofile-k6i (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
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.
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
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.
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 TH-camr (far as I know) sold their stocks that did not continue to provide dividends....
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.
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.
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...
@@Nswix 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.
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.
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?
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.
@@Kage-jk4pjlmao, needing to spend 4 years on a degree to feel respected just means you deserve none. I received respect without a degree and with a degree, because people can sense those who should be given it. It seems they can sniff out a slimy rat like you and obviously don’t give you the time of day.
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
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.
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.
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.
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
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.
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 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.
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.
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.
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.
Wait, they want $20 / hr? I haul paint for a living; that means I drive a van or box truck, navigate jobsites, lift hundreds of 50lb. buckets in a day, build and break pallets, tint paint, and operate a forklift for $18.50 / hr.
Right there with you. I work in a unionized factory, as an electrician. The union has some benefits but there are also cons. I'm willing to do more and people who will do less will get the same. I'm trying to learn and develop in a trade where the company is forced to cater to people who will do the bare minimum. I will work to raise myself in the company, but my God, I do not give a fuck about people feeling they deserve more for making coffee beverages and heating pastries. You do nothing of actual value. I appreciate the work and people will pay for it, but it is not what they think it's worth.
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.
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.
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.
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
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.
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 👍
@@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.
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 ****
In Vancouver, Starbucks has shuttered at least half their stores downtown while we have a dizzying array of local chains and one-offs. There's so much great coffee and so many patisseries around, theres almost no reason to go to Starbucks anymore. I used to find their stores very warm and inviting with the cosmopolitan theme and the hand picked music, even if it was corporate engineering anyway. But now it feels like they've stripped away any ounce of class or culture, so why on Earth would I choose them?
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.
@@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.
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.
This is interesting. In Korea, if you want to be a barista, you must attend a barista school and pass the test for certification. I’ve seen the training school for Starbucks in Seoul. This is not limited to Starbucks. All baristas must pass this test. Why is this not required in America?
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.
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.
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.
@@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.
Blows my mind that a big ass company like this can't just give basic worker protections or it'll crumble. If you'll crumble bc you're treating your people right, then you shouldn't exist then.
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.
The workers create all the value in Starbucks, they deserve to organize, they deserve to work in a democratized workplace, and they deserve all of the surplus value they create.
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
If a company can't compensate its employees fairly without dying...it should've never existed. Considering OP hates Uber and its variations, he must hate Starbucks too.
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
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.
So you admit the title of this video is false? You concluded Starbucks would survive just fine with a union- it would merely result in slightly lower margins for investors, with more of the profit going to workers… the ones who actually create most of the value for the company.
I work at a Starbucks in Georgia, where 6 hours is the minimum required amount of hours for a lunch break. Of course that means I never get any more than 5.75 hours per shift, and 5+ is on a good day 💀💀
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.
So literally it's just their image as cool and hip that Starbucks management wants, but they're ok with the optics of them treating their workers like trash? It's greed, plain and simple. The hit to those operating margins aren't making or breaking the company, but is just about their growth story. This is not a question of survival for Starbucks, it is for their workers.
That’s a bit of an oversimplification. Starbucks needs a value statement to justify why it’s not just a more expensive McDonalds, as that allows it to sustain higher costs for products to support its bottom line. I doubt they’re “okay” with appearing to treat their workers like trash either, but I suspect as they see it the choice is either lose so much margin that they can’t sustain their value proposition, and go under, or appear to have poor worker treatment and weaken their value proposition. They’re essentially making a gamble that the former option is more dangerous It’s also worth noting that Starbucks hardly treats their workers like trash. There are still places in the world where workers are basically slaves who may be abused and exploited by business owners at will. In comparison, Starbucks workers are perhaps slightly underpaid compared to their real provided value, and would prefer more schedule stability. That’s hardly being treated “like trash”, those are common situations among all workers, blue and white collar, across the world.
If workers are treated so miserably, they should try doing this thing called “learning a marketable skill” so that they can then do this other thing called “getting a better job.” Unskilled labor like pouring coffee will never, ever earn a livable wage. And that’s a fantastic thing, because it shouldn’t.
@@stetson999 what a strange position. The vast majority of labor that has existed since the Industrial Revolution is unskilled. There are very few jobs that can really be considered skilled even in sectors that traditionally have paid very good wages, such as manufacturing. Certainly, for the majority of positions manufacturing is not more skilled than being a barista, but if we said autoworkers should never make a living wage I think we would all intuitively recognize that as being callous and unfair.
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
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.
Here in the Philippines, Starbucks introduced coffee drinking culture to the whole country. Their coffee shops are so relaxing that most people wants to hang out in their coffee shop. They also pioneered these modern interior design that now most coffee shops are adopting. Its overpriced, coffee is not that gooo however the starbucks experience is just at the top
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
All that stuff about business Having to do more is stupid corporate slop designed to convince Smaller businesses that they can't possibly compete. Your goal is to make as much money as possible ethically
The video: "Starbucks has to keep their margins tight to function within their brand image" The comments: "So what you mean to say is they can't exist without exploiting their workers"
In Germany we have many coffee brands like Starbucks but everyone of them sells way better coffee than Starbucks and many Europeans rather go to a local coffee shop Than to a Starbucks
Very interesting. One thing I can say is that Starbucks has had little to no market penetration in New Zealand, and to a lesser degree, Australia. Here in NZ, we have a very strong local coffee culture, and we love supporting local cafes and coffee roasters. Its way cooler to get coffee with friends or go on a date to a local place than it is to go to Starbucks.
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 think I understand your thesis. Essentially, giving up 2-400 basis points of margin will obliterate the stock price and their reputation that has earned them such a high multiple. They could recover some of the margin with price increases but not all of it and not immediately. Thefore, their earnings and P/E multiple would get crushed. Taking a sizeable share of Howard Shultz's wealth with it. The outlook is not great for employees or shareholders no matter how this plays out. I feel it is highly likely to lead to a downward spiral. Ironically, the deversified conglomerate beverage company that Howard tried to build could have withstood this better as employee compensation would have represented a smaller proportion of their overall margin. The 2nd CEO change did a lot of damage in just 4 years. Lesson learned, when the hand picked successor takes over and hard pivots the direction of the company, get out.
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.
🤔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.
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.
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.
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.
Yea but punish the workers so I can get rich!!!!
Means the ceo finally cant buy a yacht every year
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.
@@burnt-croissants 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.
@@Guremien 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.
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 :/
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.
@@jaehparrk Not really. Only in certain urban areas. Starbucks still dominates most of the country.
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
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 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
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
@@niewazneniewazne1890Starbucks hires for 20 hours a week, NOT 40.
@@niewazneniewazne189020 per hour not day
PPP is probably about 2-3 times the price, not 5
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.
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
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
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.
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
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
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.
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.
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
@@niceprofile-k6i (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
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.
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
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 TH-camr (far as I know) sold their stocks that did not continue to provide dividends....
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.
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...
@@Nswix 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.
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.
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?
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.
@@Kage-jk4pjlmao, needing to spend 4 years on a degree to feel respected just means you deserve none. I received respect without a degree and with a degree, because people can sense those who should be given it. It seems they can sniff out a slimy rat like you and obviously don’t give you the time of day.
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!
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!
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!
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
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
Welcome to the US-Centrism bias that are youtube video esseyss
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.
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.
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.
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.
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.
Wait, they want $20 / hr? I haul paint for a living; that means I drive a van or box truck, navigate jobsites, lift hundreds of 50lb. buckets in a day, build and break pallets, tint paint, and operate a forklift for $18.50 / hr.
Right there with you. I work in a unionized factory, as an electrician. The union has some benefits but there are also cons. I'm willing to do more and people who will do less will get the same. I'm trying to learn and develop in a trade where the company is forced to cater to people who will do the bare minimum. I will work to raise myself in the company, but my God, I do not give a fuck about people feeling they deserve more for making coffee beverages and heating pastries. You do nothing of actual value. I appreciate the work and people will pay for it, but it is not what they think it's worth.
Would you like to ask for $20 an hour?
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!
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’
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.
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
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…
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.
I hope the unions succeed
Amen
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 ****
In Vancouver, Starbucks has shuttered at least half their stores downtown while we have a dizzying array of local chains and one-offs. There's so much great coffee and so many patisseries around, theres almost no reason to go to Starbucks anymore. I used to find their stores very warm and inviting with the cosmopolitan theme and the hand picked music, even if it was corporate engineering anyway. But now it feels like they've stripped away any ounce of class or culture, so why on Earth would I choose them?
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.
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.
"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?
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.
To anyone who's ever tried italian or portuguese coffee, it's no surprise that Starbucks failed there.
This is interesting.
In Korea, if you want to be a barista, you must attend a barista school and pass the test for certification. I’ve seen the training school for Starbucks in Seoul.
This is not limited to Starbucks. All baristas must pass this test.
Why is this not required in America?
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.
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.
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.
TH-cam recommended this because I listened to the song, "There's a Starbucks Where the Starbucks Used to Be".
Blows my mind that a big ass company like this can't just give basic worker protections or it'll crumble.
If you'll crumble bc you're treating your people right, then you shouldn't exist then.
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.
The workers create all the value in Starbucks, they deserve to organize, they deserve to work in a democratized workplace, and they deserve all of the surplus value they create.
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
If a company can't compensate its employees fairly without dying...it should've never existed. Considering OP hates Uber and its variations, he must hate Starbucks too.
This is a really good encouragement for unions everywhere. With unions, Starbucks can finally be gone!
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
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.
So you admit the title of this video is false? You concluded Starbucks would survive just fine with a union- it would merely result in slightly lower margins for investors, with more of the profit going to workers… the ones who actually create most of the value for the company.
If there is one thing I took from this video, it's this - what is defined as "coffee" has become very vague because of Starbucks.
More than 20 hours a week for health insurance? No problem, we'll just make sure that a sizable amount of our personnel stay under 15 hours a week.
I work at a Starbucks in Georgia, where 6 hours is the minimum required amount of hours for a lunch break.
Of course that means I never get any more than 5.75 hours per shift, and 5+ is on a good day 💀💀
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.
So literally it's just their image as cool and hip that Starbucks management wants, but they're ok with the optics of them treating their workers like trash? It's greed, plain and simple. The hit to those operating margins aren't making or breaking the company, but is just about their growth story. This is not a question of survival for Starbucks, it is for their workers.
That’s a bit of an oversimplification. Starbucks needs a value statement to justify why it’s not just a more expensive McDonalds, as that allows it to sustain higher costs for products to support its bottom line. I doubt they’re “okay” with appearing to treat their workers like trash either, but I suspect as they see it the choice is either lose so much margin that they can’t sustain their value proposition, and go under, or appear to have poor worker treatment and weaken their value proposition. They’re essentially making a gamble that the former option is more dangerous
It’s also worth noting that Starbucks hardly treats their workers like trash. There are still places in the world where workers are basically slaves who may be abused and exploited by business owners at will. In comparison, Starbucks workers are perhaps slightly underpaid compared to their real provided value, and would prefer more schedule stability. That’s hardly being treated “like trash”, those are common situations among all workers, blue and white collar, across the world.
If workers are treated so miserably, they should try doing this thing called “learning a marketable skill” so that they can then do this other thing called “getting a better job.”
Unskilled labor like pouring coffee will never, ever earn a livable wage. And that’s a fantastic thing, because it shouldn’t.
@@stetson999 what a strange position. The vast majority of labor that has existed since the Industrial Revolution is unskilled. There are very few jobs that can really be considered skilled even in sectors that traditionally have paid very good wages, such as manufacturing. Certainly, for the majority of positions manufacturing is not more skilled than being a barista, but if we said autoworkers should never make a living wage I think we would all intuitively recognize that as being callous and unfair.
@@stetson999 They should be paid the monetary value of their labor
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.
15/hour has been adequate pay until 2020. The only reason it isn't now is because housing and food prices went up.
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
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.
You think starbux introduced coffee to the masses? Wtf?
Here in the Philippines, Starbucks introduced coffee drinking culture to the whole country. Their coffee shops are so relaxing that most people wants to hang out in their coffee shop. They also pioneered these modern interior design that now most coffee shops are adopting. Its overpriced, coffee is not that gooo however the starbucks experience is just at the top
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
All that stuff about business Having to do more is stupid corporate slop designed to convince Smaller businesses that they can't possibly compete. Your goal is to make as much money as possible ethically
The video: "Starbucks has to keep their margins tight to function within their brand image"
The comments: "So what you mean to say is they can't exist without exploiting their workers"
22:56 starts talking about unions.
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
In Germany we have many coffee brands like Starbucks but everyone of them sells way better coffee than Starbucks and many Europeans rather go to a local coffee shop Than to a Starbucks
Very interesting. One thing I can say is that Starbucks has had little to no market penetration in New Zealand, and to a lesser degree, Australia. Here in NZ, we have a very strong local coffee culture, and we love supporting local cafes and coffee roasters. Its way cooler to get coffee with friends or go on a date to a local place than it is to go to Starbucks.
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 😂
One hour of work they can’t pay for some of those drinks.
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.
In most countries outside the U.S. it is illegal to crush unions (directly or indirectly).
finally a channel that I can binge every single video.
I think I understand your thesis. Essentially, giving up 2-400 basis points of margin will obliterate the stock price and their reputation that has earned them such a high multiple.
They could recover some of the margin with price increases but not all of it and not immediately. Thefore, their earnings and P/E multiple would get crushed. Taking a sizeable share of Howard Shultz's wealth with it.
The outlook is not great for employees or shareholders no matter how this plays out. I feel it is highly likely to lead to a downward spiral. Ironically, the deversified conglomerate beverage company that Howard tried to build could have withstood this better as employee compensation would have represented a smaller proportion of their overall margin. The 2nd CEO change did a lot of damage in just 4 years.
Lesson learned, when the hand picked successor takes over and hard pivots the direction of the company, get out.
Like any “good” company,they would increase only half of the demanded pay.
16 mins out of 29 and I haven’t heard about the union busting.
if your business can't afford to pay and unionize baristas then it shouldn't exist
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.