How will Schultz handle the energized union drive at Starbucks?
Baristas at Starbucks' (NASDAQ:SBUX) Reserve Roastery in New York City have voted 46-36 in favor of forming a union as labor campaigns intensify across the country. The location is the ninth company-owned Starbucks to unionize, with another 140 stores across 27 states filing for union recognition since the first bombshell victory seen in Buffalo last fall. To date, only one location that filed for elections has chosen against unionizing under Workers United, an affiliate of the Service Employees International Union.
How will Howard Schultz handle it? Today, the longtime Starbucks CEO is stepping back into the role for the third time as the company seeks a permanent replacement for departing chief Kevin Johnson. In the past, Schultz has said no employee, whom Starbucks calls "partners," has ever needed a representative and expressed his disappointment with unionization drives. Companies are often wary of unions as they can interfere with their autonomy and productivity, though Starbucks does have serious cash to keep fighting, with annual revenue last year of $29B.
Schultz could also seek to shift the conversation, especially with SBUX shares declining nearly 22% since the start of the year. He already has a town hall planned for Monday, where he will likely discuss a focus on take-away-oriented locations, higher costs and the competition. In a press release early Monday, Schultz also suspended billions of dollars in share repurchases to free up cash to invest in cafes and employees. "I am returning to the company to work with all of you to design our next Starbucks - an evolution of our company deep with purpose, where we each have agency and where we work together to create a positive impact in the world," he wrote.
Go deeper: The big wins in the restaurant industry - where there are almost no unions - are heating up organized labor and advocacy nationwide. On Friday, Amazon lost efforts to stop unionization at its JFK8 warehouse on Staten Island, marking the first-ever labor foothold at the retail giant's U.S. operations. President Biden has also promised to be the "most pro-union president in American history," declaring on many occasions that "unions built the middle class."