Starbucks tells shareholders it’s doubling down on “third place” playbook

Starbucks CEO Brian Niccol told shareholders on Wednesday that he wanted the coffee giant to be a “third place” for its customers.

Starbucks, plagued with lagging sales, poached Niccol from Chipotle last year to correct course. His response has centered around a “third place” mentality that focuses on making Starbucks feel less like corporate coffee giant with big Wall Street shareholders and more like a local mom-and-pop coffee shop.

That means writing names on cups, bringing back mugs, and adding more outlets and seating for paying customers.

“We might have made some mistakes on this one,” Niccol said of the company’s shift away from its “third place” roots as it grew bigger. “Now we have to go back and fix it.”

Jason Woods, a Starbucks barista in Baton Rouge, Louisiana, said writing on cups takes more time from a barista’s day and feels inorganic. Other moves Niccol has made to simplify the process for baristas, like removing items from the menu, has actually made their job more cumbersome because people still want their usual order.

A Java Chip Frappuccino, for example, is now an off-menu item, meaning baristas need to input all the ingredients and customers are charged more. “Now we have customers angry at us because they have to pay more for drinks they’ve always gotten,” he said.

Niccol also insisted to shareholders he wanted Starbucks to be “the best job in retail.”

A day earlier, unionized Starbucks workers at over 100 cafés walked off the job, protesting another stalemate it hit with the company as the union seeks to finalize a union contract. Several baristas were arrested in Pittsburgh and Chicago.

Starbucks has staunchly opposed unionization efforts at its stores since its workers first started to organize in 2021, and has faced several complaints from the National Labor Relations Board. The company signaled last year that it would return to the bargaining table, but a deal wasn’t reached by the end of the year, a deadline the parties had set.

The company told shareholders on Wednesday it’s “making great progress” on reaching a contract. Shareholders voted on eight proposals, three from management and five from shareholders. The board is against all shareholder proposals, including one that calls for a review of the company’s labor practices. 

The negotiations fell apart in December because the company’s proposal had “no new wage increases for union baristas now and a guarantee of only 1.5% in future years.”

Niccol made $96 million in the first four months on the job. Woods, a member of the Starbucks union, makes about $15.50 an hour after earning a $0.30 raise in the past year.

“Why is he getting paid almost $100 million while we’re only getting 30 cents?” Woods said.