Don’t call it a comeback… Longtime Starbucks CEO Howard Schultz is taking back the reins as (interim) chief exec this week — his third time in the gig — and he’s already brewing up big changes. First order of business: halting stock buybacks. (Flashback: former CEO Kevin Johnson pledged $20B in new buybacks and dividends as recently as in October.) Starbucks posted record sales last year as you splurged on venti chai lattes, but the world's largest coffee biz has been struggling with rising supply costs and overwhelmed, unhappy baristas:
- Starbucks’ flagship Reserve Roastery in NYC just became the ninth location to unionize. Another 140 stores have filed for union recognition.
- Starbucks has spent $1B over the past two years to boost employee wages and incentives — including a new starting wage of $17/hour — but some workers say it isn’t enough.
A new era for unions… Starbucks isn't the only biz in the middle of a rising labor movement. Last week Amazon lost a historic fight after NYC warehouse workers voted to form the company's first US union. A tight labor market has spurred demand for higher wages and stronger benefits, and brought union popularity to its highest level since 1965. And it’s even gaining momentum in the famously union-averse food biz.
There are three big ways to spend your spoils… when you’re a profitable public company: (1) give it back to shareholders through dividends and buybacks, (2) reinvest in the biz (think: acquisitions and salary hikes), or (3) pay down debt. Starbucks is moving away from an investor-first mentality to one more focused on workers — a sign the company sees the resurging labor movement as more than a passing trend. But it’s a risky time to pivot from a tried-and-true formula that makes investors happy: Starbucks shares are down 20%+ so far this year.