Starbucks is quietly changing the business as furious baristas slam the ‘cult that pays $9 per hour’
Business Insider, UK
- Kate Taylor,
- May 23, 2017, 3:42 PM
Downloaded 30/05/2017 from: http://www.businessinsider.com/starbucks-north-star-agenda-causes-barista-backlash-2017-5
In late April, an employee at a Starbucks in Florida was called to a “very mandatory” meeting with the rest of his store’s employees.
“Each manager was required to read verbatim about a half-hour of dicta blaming the baristas for all these problems,” the employee, who has worked at Starbucks for more than five years, told Business Insider. The root of the issues, he said, was a lack of connection between workers and customers.
The same meeting has taken place at every Starbucks store in the US over the last month, as part of what the company is calling a “fight for the heart and soul” of Starbucks. These meetings are part of a battle to double down on improving the customer experience in Starbucks stores.
But the employee left the meeting infuriated, feeling that Starbucks was forcing baristas to take responsibility for customer-service problems caused by other issues like understaffed stores, an increasing demand from mobile and drive-thru orders, and time-intensive drinks. In the meeting, he said, Starbucks essentially ordered employees to find a way to improve the customer experience — or quit the company.
A barista prepares a drink at Starbucks’ Vigo Street branch in Mayfair, in central London.StefanWermuth/Reuters
“Everyone’s jaw dropped,” he said. “There was a point where they said if you’re not down with this, you’re welcome to get out.”
After his manager’s monologue, he spoke up. He and another employee raised concerns that Starbucks was putting too much of the blame on employees. He said he was shut down by his manager, who he said sought “submission” over input.
He wasn’t the only person who took issue with the meetings. Several employees have spoken out online and in interviews with Business Insider, saying the coffee giant’s new agenda is misguided and ineffective.
Starbucks baristas told Business Insider they felt Starbucks was right about one thing: that the coffee chain needed to make some changes. However, instead of corporate pep talks, the employees we spoke to said they wanted better support in the form of higher wages and better staffing at stores.
‘Fight for the heart and soul of the company’
Howard Schultz, chairman and former CEO of Starbucks, and current CEO Kevin Johnson.Starbucks
The meeting that employee attended is part of a two-year agenda called North Star that aims to refocus the company’s approach to customer service.
“North Star was really created out of an ambition to focus ourselves on what makes the Starbucks experience, the Starbucks experience,” Kris Engskov, who is leading the program as Starbucks’ new head of US retail, told Business Insider in an interview.
North Star is one of the company’s first major initiatives under the leadership of Starbucks’ new CEO, Kevin Johnson, who replaced longtime chief executive Howard Schultz in April. Johnson and Engskov are emphatic disciples of the idea that what makes Starbucks special is the ability of its baristas, whom it calls “partners,” to form “emotional connections” with its customers.
“I think a key differentiator for Starbucks is that emotional connection our partners have to what we stand for, and the fact that we are in the business of human connection,” Johnson told Business Insider in an interview in March. “At the end of the day, there is one thing that every person on this planet has in common, and that is the human experience. … It’s a beautiful thing.”
Engskov hit several of Johnson’s key points in a letter to employees that was distributed in the North Star trainings and obtained by Business Insider: Emotional connection is more important than ever, customers visit Starbucks for connection, and in-store workers are the ones tasked with supplying that connection.
However, the letter also gets at something Johnson has avoided discussing — the idea that Starbucks is falling short in providing these connections. Engskov wrote that Starbucks was “in a fight for the heart and soul of our company.”
“Despite all the remarkable talents and capabilities our store partners bring, we’ve allowed complexity to get in our way,” Engskov wrote. “And, frankly, these are just excuses. Excuses we’re no longer willing to accept. We’re going to move quickly to make some real changes to how we operate — in our support centers and in our stores — to unleash those remarkable talents.”
Starbucks has for years consistently increased same-store sales in the US and globally. The company reported in April that same-store sales jumped 3% in the second quarter. However, the company is facing a series of problems that threaten its upward trajectory.
Traffic in the second quarter was flat after dropping 2% in the first quarter of 2017, meaning fewer people are visiting the stores.
Mobile ordering also continues to be a headache for the company, as waves of online orders create bottlenecks at stores. And, while the Unicorn Frappuccino dominated social media in mid-April, the popularity of this and other Instagram-friendly beverages that take longer to make have resulted in backlash from baristas.
National reinvigoration versus ‘company Kool-Aid’
A barista at a Starbucks in Seoul, South Korea.REUTERS/Kim Hong-Ji
Starbucks executives say they intended the North Star letter and corresponding meetings to encourage discussions about potential problems and reenergize employees. However, some employees said they saw the initiative as sidestepping the actual issues facing workers and the company.
“North Star is basically every customer service culture reinvigoration that we’ve ever had with an ultimatum attached to it,” another Starbucks worker told Business Insider. If an employee “stands up for themselves or in any way” or puts a customer “second to something else,” they said, “they put their job on the line.”
According to Engskov, this was not Starbucks’ intention. He described North Star as a “two-part equation.” One is rallying and training employees to form connections, and the other is finding ways for the Seattle corporate “support team” to better support baristas and streamline their work, with fixes such as adapting to mobile ordering growth, making scheduling easier, and adjusting inventory availability.
“We’re listening very, very closely” to employees,” Engskov said. “We’re taking that feedback, and we’re doing something with it.”
This supportive part of North Star apparently has been lost in translation for many employees. A Starbucks worker who quit the week before her store’s North Star meeting said the new agenda sounded more like “company Kool-Aid” than actual changes.
“Really, it’s Starbucks saying, ‘Hey, we’re going to keep understaffing you and running you ragged, but on top of that, we want you to be better at customer service. Oh, and you won’t get paid more for it either,'” she said.
On the r/Starbucks subreddit, one of the more active forums for Starbucks discussion online, North Star has become a hot topic of debate.
Some employees were on board with Engskov’s vision, describing the meetings as productive and even inspirational. Worksheets that employees were required to fill out solicited feedback on how Starbucks could improve things for both employees and customers.
The #ToBeAPartner hashtag on Instagram, which is populated by photos posted by Starbucks workers, shows employees who seem eager to show off their Starbucks spirit.
A post shared by Melissa Urquhart (@sbuxmelissa__) on May 16, 2017 at 1:34pm PDT on May 16, 2017 at 1:34pm PDT
“My store has been approaching the breaking point for weeks as far as animosity and resentment, and our meeting was filled with positivity and legitimately constructive criticism,” says a comment on Reddit. “All but one partner were working to set goals and try to work better as a team.”
Other employees said they appreciated Starbucks was attempting to address problems at the company, even if they didn’t think the meetings were a success.
“I completely agree that the company lost its way, and that it’s time for us to go back to our core values,” one Reddit user wrote. “I’m happy that they’re finally recognizing where they went wrong, and that they’re making an effort to fix it. But no one is addressing the fact that the partners make this company.”
Others on Reddit said they saw the meetings as a waste of time — a corporate requirement unlikely to have any lasting positive effects and could even damage morale by blaming workers. To ensure North Star is a success, Starbucks would have to win over these skeptical employees who expect more from management.
A ‘cult that pays $9 per hour’
One criticism of the North Star agenda is that it suggests the company values its customers over its employees. Another gripe is that it ignores the practical realities of working in the coffee shop.
“There is no customer connection when we’re as busy and understaffed as we are,” another Starbucks worker told Business Insider. “Put another person on the floor, and we can talk. I’ve had people call the store to complain that we seemed rushed and upset. The stress is overwhelming.”
According to workers whom Business Insider spoke to, understaffing started to become a major problem at Starbucks last year. In late June, Jaime Prater, a Starbucks employee, created a Coworker.org petition that said a “lack of labor is killing morale” at the chain.
“Labor is the real bone of contention, in addition to the drinks that corporate continues to roll out,” the petition says. “Baristas also continue to struggle in their stores, with more expectation, with less support staff.”
According to Starbucks, workers had overhyped understaffing concerns, and regional leaders didn’t see a need to make changes. The company hasn’t changed its staffing policy and leaves decisions to local leadership.
“How we staff our stores is the most important thing we do,” Engskov said. “Our store managers really have great latitude in determining how they’re going to staff their store.”
Some workers say understaffing issues persist. Starbucks employees are still signing Prater’s petition, which now has more than 17,500 signatures, with the most recent signatures appearing this week.
“Understaffing has become a problem,” an employee said. “They cut our labor in half last year, and many times there’d only be one barista on the floor at a time. It’s still the case now.”
Of the company’s 2016 sales, they said, “I’d bet my life to say that if they’d kept us fully staffed, that growth would’ve been in the double digits.”
In December, Starbucks reported that same-store sales in the Americas increased 6%, based on a 5% increase in sales and a 1% increase in customer visits.
One solution to Starbucks’ mobile-order bottlenecks would be to add a pick-up shelf.Kate Taylor
Mobile is a huge growth area for Starbucks. However, adding mobile orders has changed baristas’ workflow. Employees at some busy locations are forced to deal with bottlenecks when a rush of mobile orders arrive at the same time, something that Engskov and other Starbucks executives have said they’re working to address.
“Obviously, we’re not connecting because we have mobile here and we have drive-thru here,” the Starbucks employee in Florida said. “We’re running around like crazy.”
Frappuccinos represent another way Starbucks is attempting to increase sales, but the frozen beverages have also been a source of frustration for baristas. While pouring a cup of coffee is only one step, making a Frappuccino is a messy, noisy process with multiple steps.
Baristas who spoke with Business Insider said concerns about mobile orders and Frappuccinos wouldn’t be issues if stores were better staffed or employees were paid more.
Last July, soon after reports of understaffing emerged, Schultz published an open letter on Starbucks’ Facebook page promising a pay raise in October, enhanced stock options, revamped benefits, more stable scheduling, and a new dress code.
However, this October pay raise replaced the company’s annual January raise, according to the company. As a result, Starbucks workers haven’t yet received a raise in 2017, and some employees feel salaries are still too low.
According to Glassdoor data, baristas are paid $9.50 an hour on average. For comparison, average pay for a McDonald’s employee is about $8.49 an hour, and the median pay for barista-style servers is $10.28 an hour, according to the Bureau of Labor Statistic.
Starbucks emphasizes that the chain offers benefits beyond hourly pay, including college tuition assistance, 401(k) matching, and the ability to purchase Starbucks stock through the Bean Stock program. While some Starbucks employees said benefits helped persuade them to stay at the company, others said higher pay would better serve workers.
“My team wants to be able to afford rent and groceries,” one employee said. “If you had asked partners if they could have the option for higher pay or the college achievement program, somewhere around 90% of all partners would have asked for increased pay.”
The employee who quit before the North Star meeting said she saw many new “bright-eyed and excited” new employees become jaded after experiencing a reality of low pay, bureaucracy, and internal disconnect.
“It’s a cult that pays $9 per hour,” she said.
What comes next
Starbucks workers preparing coffee using the siphoning technique, which is available at stores with Reserve Bars.Stephen Brashear / Stringer / Getty Images
The North Star meetings are the beginning of what Starbucks wants to be a process of improving customer service by sparking connections.
“This is not prescriptive,” Engskov said. “Our part of the job is to really set [employees] up for success, not to tell them how to do this.”
Engskov’s aim is that North Star will bring workers back to their “bright-eyed” early days at the company — and translate that energy to interactions with customers. Finding ways to improve customer service is crucial in creating brand loyalty, especially as the chain prepares to open 5,000 locations over the next five years.
Nearly all the Starbucks employees who spoke with Business Insider, including the harshest critics, said they enjoyed and even loved parts of their jobs. However, they also said they saw a company that was putting the blame on employees instead of taking responsibility for its growing pains.
If Starbucks wants to connect with customers, it needs to connect with these employees first.
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