SEATTLE- Unionization efforts have kicked off at hundreds of Starbucks chain stores across the country in over 32 states. Over 240 locations are planning to hold unionization votes to see whether or not their workers’ unions will be accepted or not.
These efforts come as a push for a higher pay and improved labor conditions. Alongside this around 50 company-owned stores have voted majority pro-union.
To try and stop the strong push for a company-wide union Starbucks plans to invest some $1 billion in improving their working conditions and offering a higher pay, following their pledge to raise the minimum wage for US employees, for 2022. More training for employees alongside improved worker benefits will also be included with the investment, but it will not affect stores in the process of unionization.
Howard Schultz told financial analysts over a conference call earlier this week: “Federal law prohibits us from promising new wages and benefits at stores involved in union organizing. By law, we cannot implement unilateral changes at stores that have a union.”
The company plans to improve working conditions via new ovens, coffee machines, and improved technology across each store, also allowing them to stay in pace with the market much more efficiently.
“The combination of shifts in customer patterns, accelerating demand and algorithms built for different customer behaviors has placed tremendous strain on our US store partners,” Schultz said.
Struggling to keep up
Around two years of covid lockdowns across the United States put a strain on many companies and businesses, big and small. However Starbucks was able to withstand this era due to record demand for their products. However, the demand became too big for the company to handle properly.
Their net income in 2022’s Q1 was $675 million, about 58 cents per share, and higher by 2.4% compared to the same quarter last year. However, international sales fell some 8%, mainly due to a massive 23% fall in sales in China, where many stores were closed or forced to accept delivery only due to national lockdowns.
However, even then business unit sales in North America grew $5.4 billion, or 17%, over the first quarter. High increases in transactions alongside stronger demand for new products were the most noticeable reasons for this. Food item sales increased 25% compares to 2021’s Q1.
A new business model
With the massive $1 billion investment plan on the way, the company plans to improve the speed of service for in-store drive-thrus and deliveries with better technology. 70% of US sales during the second quarter were due to drive-thrus and deliveries, and delivery sales increased 30% during the first half of 2021.
Awaiting the potential boost in business performance, which analysts believe will jump 90%, the company has moved its investors day from the end of the year to September.
Schultz spoke about the investors day to analysts, stating: “Companies spend hundreds of millions of dollars on marketing, promotions and social media trying to create demand.”
“We have demand everywhere we look, despite having not lived up to the expectations we set for ourselves. The biggest opportunity ahead for us is to meet strong and growing demand in our stores more efficiently and effectively, and to leverage technology to enhance productivity and reduce the burden on our store partners.”
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