Starbucks Accused of Slashing Employee Work Hours Amid Cost Cuts
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An online petition accusing Starbucks Corp. of "extreme" cutbacks in work hours at its U.S. cafes, hurting both employee morale and customer service, has been signed by more than 9,000 people.
The world's biggest coffee chain, trying to address cooling growth at its U.S. shops, recently introduced technology that allows customers to order and pay from mobile devices. That service aims to boost sales and reduce bottlenecks in stores.
Starbucks Chief Executive Howard Schultz and other top brass have spoken with Jaime Prater, a southern California barista and the online petition's creator, the Seattle-based company said.
It declined to give details but Starbucks spokeswoman Jaime Riley said it is not uncommon for Schultz to reach out to members of its 160,000-strong U.S. workforce. She also said no nationwide cutback in labor hours or jobs was underway at Starbucks stores.
Starbucks has a software system that determines labor needs based on business trends. Store managers can work with leadership in their respective regions to determine labor needs based on any factors not taken into account by the system, Riley said.
Prater told Reuters he is cautiously optimistic after executives said they are looking into the issues raised in the petition.
"There is a small window right now" to act, he said.
Comments on the petition painted a picture of broad discontent at the company known for offering better wages and benefits than other chains, including healthcare coverage, retirement account contributions and paid vacation days.
Prater and many signers say they noticed cutbacks in U.S. staffing hours after Starbucks in April reported a deceleration in quarterly cafe sales growth. Several of them said store managers were under pressure to comply with the dictates of Starbucks' software system.
Almost 7,000 signers of the petition described themselves as employees, according to Prater. They did not give their full names and Reuters was not immediately able to confirm that signers worked for Starbucks.
"The labor situation has gone from tight to infuriating," Prater said.
One central Calif. store has seen its labor allotment shrunk by about 10 percent, even though sales are up, its manager, who asked not to be identified for fear or reprisal, told Reuters.
Similar complaints were heard from many signers of the online petition.
"No matter what we do to save on labor at my store, the system tells us EVERY SINGLE DAY that we are at least 8 hours over in labor for the day and have to cut even more," wrote signer Aaron I.
"We're suffering, & so are our customers. It's not working," wrote Leslie S, a self-described shift manager.
Rising pressures a grind
"Mobile orders have increased sales and created more need for labor, yet the company is cutting labor," wrote Makenna S, a shift supervisor.
Like other restaurants and retail companies, Starbucks is wrestling with the effects of local minimum wage increases. Some petitioners said Starbucks had not boosted pay for existing workers in areas where minimum wages have increased - creating a situation where new hires are paid about the same wage as more experienced peers.
Others said take-home pay had also taken a hit because tipping has fallen substantially amid broad customer adoption of the "Starbucks Rewards" program, which allows customers to pay with a loyalty card or mobile phones.
During the second quarter, Starbucks' U.S.-dominated Americas region posted a 7 percent gain in sales at established cafes, down from 9 percent in the first quarter. The current quarter rise is expected to be 6.2 percent, according to Consensus Metrix.
"They've been posting industry-leading same-store sales growth for the last five years while reducing labor costs - a trend that can't continue," said Howard Penney, an analyst at Hedgeye Risk Management, who follows Starbucks.
(Reporting by Lisa Baertlein in Los Angeles, editing by G Crosse and Tom Brown)