Starbucks has been a favorite for many Americans since 1971. However, the company is now facing a unionizing effort from its own employees in the United States. In response to this potential campaign, Starbucks will be raising pay rates for US workers from $7.25 per hour to $9 per hour by October of this year and then again to $10 per hour by 2017 as well as offering higher sick leave benefits and clearer career paths within the company. While this may be a positive move for the company’s employees, it is a cost that will have to be passed along to customers. With this being said, Starbucks might lose some of its core customers as well as those who are just looking to grab a cup of coffee on their way into work or school. In addition to raising wages, Starbucks is looking to cut back on spending by eliminating free syrup for certain items and offering prepared sandwiches made at the stores.
The added costs might cause customers to find other coffee shops in the area or make their own at home.
Now that Starbucks is raising wages for its US employees, it should be able to avoid any sort of employee campaign against working conditions. This can make it difficult for competing coffee chains like Dunkin Donuts to get employees to leave for higher wages. In fact, Starbucks’ chief executive has stated that there has been a 15% increase in applications from workers at competing coffee shops since the announcement of pay raises for US employees. With this being said, Starbucks might not be able to hold onto its top performers with these new wage rates and benefits packages.
Starbucks has released data showing that the wage raise for US workers is already leading to higher employee satisfaction. Many employees at competing coffee chains have also stated in interviews that their employers are looking to match Starbucks’ wages in order to avoid losing talent. This will be a great help for many of Starbucks’ employees, but it might not last long if competing coffee shops are able to meet or surpass these wages. The price of this wage raise for US employees is around $250 million, which will be passed on to customers in the form of lower profits and higher prices. The company’s shares also fell by 2ter announcing the increased costs, despite assuring investors that long term benefits would outweigh the costs.
The wage increase is another cost that Starbucks will be passing along to customers in order to make its employees happy. Despite claims that the pay raise will lead to higher employee satisfaction, this might cause customers to find other local coffee shops or homes away from home. With this being said, paying employees more should still set the company up for success in the long run.
The wage raise should lead to more satisfied employees who are wanting to stay with Starbucks’s company for longer periods of time. However, other coffee shops might be able to meet or exceed these rates if they are determined enough. With this being said, customers might find alternative places to purchase their desired drinks and food items while still feeling like they can get their money’s worth.
The wage raise has passed along costs to customers in the form of lower profits and higher prices. While employees might be satisfied with their new wages, there is no guarantee that it will last unless competing coffee shops are unable to match or surpass these rates.