Seattle — Starbucks Corporation will make additional investments in its employees and stores for prioritized areas such as increased pay, more training and modernized collaboration, store innovation, etc. — bringing the total investments to nearly $1 billion in this fiscal year alone. This decision enables Starbucks to meet record customer demand and partner needs in an operating environment deeply impacted by COVID.
On a call with investors, CEO Howard Schultz said, “What you will see is the transformation of the Starbucks customer and partner [employee] experiences. The transformation will accelerate already record demand in our stores. But the investments will enable us to handle the increased demand — and deliver increased profitability — while also delivering an elevated experience to our customers and reducing strain on our partners. And we will reintroduce joy and connection back into the partner experience.”
Since his return as CEO on April 4, Schultz and other Starbucks executives have been visiting retail and roasting plant partners around the country to hear firsthand how their work and lives have been impacted over the last 2 years. In immersive collaboration sessions, many partners spoke bluntly of the challenges on and off the job, and the unprecedented operational and physical impacts from COVID on the partner and store experience. They offered suggestions for improvements and innovations based on their direct experience, gave feedback on investments under consideration, and voiced hope for the future.
As previously announced, Starbucks is moving all U.S. store employees to a $15/hour floor this summer, effective August 1, and also adding incremental increases that will apply to all U.S. store partners, while recognizing and rewarding tenure. On August 1, average hourly pay at Starbucks will be nearly $17/hour nationally. All partners hired on or before May 2 will get either a 3% raise or $15/hour, whichever is higher.
Further, Starbucks will continue to recognize tenured partners. Partners with 2-5 years of service will receive at least a 5% increase or move to 5% above the market start rate, whichever is higher. Partners with 5+ years of service will receive at least a 7% increase or move to 10% above the market start rate, whichever is higher.
On August 1, Starbucks will also double its planned investments in store manager, assistant store manager and shift manager pay for leaders hired on or before May 2. These are one-time investments in base pay in addition to the company’s planned fiscal year ‘23 raises this fall.
Additional investments include the introduction of credit card / debit card tipping by late 2022 as ways for customers to further recognize their favorite baristas. The company plans to move forward with equipment and technology enhancements, including resolving all “non-critical” repair and maintenance immediately. Starbucks will upgrade all in-store iPads with new models, accelerating rollout of new equipment like MerryChef Ovens and Mastrena 2 espresso machines and more.
“We are confident the investments we are making in our partners, our stores and our brand will deliver significant returns, in excess of historical levels, resulting in accelerated long term growth,” says Rachel Ruggeri, chief financial officer of Starbucks.
Starbucks Coffee Company operates more than 34,000 stores worldwide. For more information, visit www.starbucks.com.
SOURCE: Starbucks Corporation