First day in office! Starbucks is starting to transform!

According to the New York Times, the current interim CEO Howard Schultz (Howard Schultz), the "new" officer announced on his first day in office: he will stop Starbucks share buyback program! Hope to invest more profits in working partners and the operation of all stores. The company's shares fell more than 5 per cent in morning trading on the news.

After the outbreak, affected by the supply chain crisis, high inflation and local epidemic prevention measures in the United States, Starbucks reduced its operating costs by laying off staff and cutting operating funds for its stores. at the same time, the continuous introduction of beverage discounts attracts a large number of consumers, increasing the workload of working partners several times, but wages and benefits are at a standstill. Under the pressure of high-intensity work and environment, Starbucks partners began to be dissatisfied. At the beginning, the partners hoped that Starbucks could invest more money in employee benefits and store operation. At that time, Starbucks turned a deaf ear to the request of its partners and had no intention of solving it. After repeated requests to no avail, the partners began to petition and vote to form a union, hoping to have a channel to negotiate directly with the company.

At that time, the company was indifferent to the increase of employee benefits, and it was very positive to prevent the establishment of a trade union. But it didn't work. With the emergence of the first Starbucks employee union, more and more Starbucks partners in the United States began to fluctuate, the application to join, to join, and eventually things got out of control. So far, employees of 10 Starbucks stores in the United States have voted to form a union, and more than 170 have asked to join the union. After Starbucks announced the retirement of Kevin Johnson, the former chief executive, Howard Schultz will temporarily take over as chief executive until a new successor is chosen. Before the official return, Howard had a plan to "change the situation at Starbucks," including an increase of $1 billion in salaries, training and benefits.

But such a large sum of money certainly did not come out on his own! If you increase on the one hand, you will decrease on the other. So on the first day the new official took office on April 4, Howard Schultz announced through an open letter that the share buyback program would be suspended immediately. When a company uses its money to buy back its own shares, it usually raises its share price, rewarding investors and executives who usually hold a large number of shares. But because of the epidemic, Starbucks stopped share buybacks in 2020, and until the end of 2021, Starbucks renewed its commitment to investors that it would pursue $20 billion in dividends and buybacks within three years. Starbucks has bought back 31.1 million shares in the quarter ended Jan. 2, 2022. Under the current license, Starbucks can also buy back 17.8 million shares. It has not yet been disclosed how much money was spent on the repurchase.

-Source: new York Times

But what is clear is that Howard Schultz will use the money to buy back 17.8 million shares to invest in company employees and store operations. In order to "stabilize the morale", Howard Schultz will go to the store in the next few weeks to meet face-to-face with grass-roots employees. Howard Schultz's return has won the approval of many investors and employees, because Howard Schultz did not object to dealing with trade union issues, but chose to solve the most essential problems. Before taking office, Howard Schultz talked to the first unionized store manager. Howard Schultz told the New York Times afterwards: they were disappointed that the company failed to help them solve the operational problems of the store. So when he formulated Starbucks' plan for 2022, his first thought was to provide employee benefits and solve the problem of manpower shortage.

Howard Schultz once said: "people (partners) are always our most important asset and Starbucks' competitive advantage." This is like the foundation is loose, how can the building be stable? Instead of trying to build a support frame outside the building, you should try to make the foundation strong. The same is true of the company, if even employees can not get good treatment and sense of belonging in the company, the operation of the company will only become more and more difficult. Photo source: online New York Times

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