Starbucks CEO and Founder Starts Petition Against Government Shutdown
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Starbucks CEO and Founder has started a government shutdown petition.
Starbucks founder and CEO Howard Schultz has launched a petition for the public to sign that requests three things from leaders in Washington, D.C. The first is to come together to reopen our government to serve the people. The second is to pay our debts on time to avoid another financial crisis. And finally, he asks them to pass a bipartisan and comprehensive long-term budget deal by the end of the year. While Schultz maintains that he is a nonpartisan, he did tell The Huffington Post in an interview that it "was 'correct' that the Republican Party deserves more blame for the current impasse, but that it was now up to both parties — and the president — to compromise."
The Huffington Post reported that Schultz "decided to launch the petition drive after discussing the idea with one of President Barack Obama’s top advisers, Valerie Jarrett, as well as with House Budget Committee Chairman Paul Ryan (R-Wis.) and Senate Budget Committee Chairman Patty Murray (D-Wash.)." Schultz is also adamantly opposed to the stopgap solution that some have suggested, which will merely lift the federal borrowing limit and carry the government for six weeks.
Schultz lamented that there are others around the country who are just as outraged as he is, not only about the shutdown but the potential of such a temporary solution. And since one of the government-run means of expressing public sentiment (the White House "petition" line) has been made unavailable during the shutdown, he took matters into his own hands. Due to the influence Starbucks has on American citizens, Schultz's petition may be well-received. Starbuck reportedly serves about 45 million U.S. customers every week, and the petition was made widely available at about 8,000 to 10,000 Starbucks locations starting this Oct. 11. The petition is also available online and Starbucks patrons can print the petition out and bring it to their local coffee shop.
Schultz told The Huffington Post, "Civil discourse is more necessary than ever."
How Starbucks wants to be the face of ‘conscious capitalism’
H oward Schultz, the founder and chief executive of Starbucks, wants to start a conversation about race. But even the baristas charged with engaging customers in the company’s controversial #RaceTogether campaign near his childhood home in Canarsie, Brooklyn, aren’t sure that’s a good idea.
“You might want to talk about racial issues if you’re Caucasian, but it’s more difficult if you’re African-American,” said one customer, Felicia Green, 25, who, like Schultz, attended Canarsie high school.
At a Starbucks in Brooklyn’s Kings Plaza mall, many felt that any such discussion would have to be addressed carefully – if at all. One barista, Michael, said he was concerned that “people won’t be able to take it . they may be offended by the truth”.
This may be all part of the Frappuccino billionaire’s plan. As the #RaceTogether campaign – under which employees will write the hashtag on coffee cups as an invitation to talk to them about race – was launched across the US on Friday, it was not clear how Schultz’s vision of talk therapy for coffee consumers would play out.
In Manhattan’s Flatiron district, Schultz’s pamphlets on the subject, stacked up on tables, were glanced over as curiosities and the chief executive’s invocations were largely ignored. “Conversation has the power to change hearts and minds,” wrote Schultz in a newspaper-sized pullout.
Since announcing the initiative, the company and its founder have faced widespread criticism that – perhaps with the best of intentions – they are trying to reduce an incendiary issue to a marketing tagline. For its part, Starbucks insists #RaceTogether is not mandatory – neither customers nor employees have to engage in it. It is merely a suggestion, an invitation. If a customer asks, “try to engage them in a discussion,” Schultz said.
The 61-year-old’s concern with a growing inequality of opportunity and what he calls the “fracturing of the American dream” echoes his own personal trajectory, which has taken him from a childhood in this poor part of Brooklyn to becoming one of America’s wealthiest men, with a fortune of around $2.6bn (£1.7bn).
And Starbucks’s brand narrative is closely tied to Schultz’s story: he won an athletics scholarship to Northern Michigan University, worked in sales at Xerox, switched to a Swiss coffee-maker manufacturer, then jumped to a fledgling Seattle company – Starbucks – with the idea of replicating the Italian coffee house. But it was not until he returned to Starbucks in 2008, after an eight-year hiatus, that his engagement with political causes became more explicit.
That engagement has led him to campaign on a range of issues. He pledged to hire 10,000 Iraq war veterans and military spouses over five years, and committed $30m to research on post-traumatic stress in veterans. In 2013, he led a petition urging Congress to end the government shutdown and wrote an open letter asking gun owners to refrain from bringing weapons into Starbucks – even if they were allowed to do so shops. When, at the firm’s annual meeting two years ago, an investor complained that Starbucks’s support for gay marriage in Washington state had harmed sales, Schultz invited him to divest his shares.
“The divide between profitability and doing the right thing is collapsing,” Schultz recently told the Seattle Times. He has said he is leading Starbucks “to try to redefine the role and responsibility of a public company”.
But Starbucks stands out because many of the causes it addresses have little to do with its business. “I don’t know where this will go,” Schultz told an employee forum on race relations in Seattle. “But I don’t feel, candidly, that just staying quiet as a company and staying quiet in this building is who we are and who I want us to be.”
Not all employees are happy to be burdened with the responsibilities of Schultz’s “conscious capitalism”. Critics of Starbucks say the positions it adopts are platitudes that demand little from the company or customers in terms of identifying the specifics of an issue or concrete ways to address it.
After #RaceTogether was unveiled, Corey duBrowa, Starbucks’ director of global communications, received so many negative messages on Twitter that he deleted his account (he restored it a day later). Others found Schultz’s call for “one voice” on the topic of race condescending. Kate Taylor, a writer for the business magazine Entrepreneur, wrote that Schultz could hardly paint himself as a “visionary progressive” for discussing race when it is “something others, especially people of colour, haven’t exactly been silent on in recent months or the last couple centuries”.
While good deeds offer some protection against fast-moving Twitter attacks and negative internet rumours, not all of Schultz’s social programming has produced favourable publicity. Last year he announced Starbucks would become the first US company to provide free college tuition for all employees, or “partners” as he prefers to call them. Critics, however, said the programmes were neither the first nor entirely free.
A Starbucks in New York. The company says that the #RaceTogether campaign will not be mandatory for staff. Photograph: Mark Lennihan/AP
Nor has Schultz, as the figurehead of a company associated with the imperial reach of US corporations, always been pitch-perfect overseas. In 2009, he drew the ire of then UK business secretary Peter Mandelson for saying Britain appeared to be “spiralling”. Mandelson retorted that it was Starbucks, not the UK, that “is in a great deal of trouble”. The company offered an apology, saying: “We are all in this together.”
Then, last year, Starbucks incurred the wrath of UK taxpayers when it revealed that it had paid only £8.6m in tax since 1998. The company claimed it had not been profitable critics say its receipts were being funnelled through the Netherlands and Switzerland.
But could Schultz and the current generation of US corporate leaders give American capitalism a new face? Walter Robb, joint chief executive of food chain Whole Foods Market, told the Seattle Times: “Government has shown its limits, and its inability to act in many cases it’s really incumbent on business to step up to a broader view of responsibility.”
But others warn that Starbucks’s sense of righteousness could backfire. Business advisers warns that getting too involved in issues creates expectations that companies can’t manage. “You’re going to open the door to all kinds of people holding you to all kinds of different standards,” said Nancy Koehn, a Harvard Business School professor. “Small things can trigger great rage.”
In the past, Starbucks has faced criticism over issues from the distribution of tips to plans to expand in Israel. Last year, it came under fire after the New York Times ran a profile of a barista who was struggling to meet a work timetable scheduled by a computer.
But representing baristas as racial counsellors may not be as radical as it seems. Ever since he visited Italy and saw how Italians used coffee bars as “a place for conversation and a sense of community”, Schultz has pushed Starbucks to be more than a supplier of caffeine fixes. In the wake of the racial unrest in Ferguson, Missouri, he convened a discussion with employees in Seattle and in cities across the US.
“We at Starbucks should be willing to talk about these issues in America,” Schultz said. “Not to point fingers or to place blame, and not because we have answers, but because staying silent is not who we are.”
Idealism, marketing or both? Schultz has never been demure about his achievements – he’s published two books covering that ground intensively: Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time and Onward: How Starbucks Fought for Its Life Without Losing Its Soul – and voiced some almost evangelical thinking.
At the height of the company’s expansion in 2005, Schultz told CBS’s 60 Minutes: “We’re not in the business of filling bellies. We’re in the business of filling souls.”
Still, Schultz’s his call for chats about race over coffee may not reach low-income areas such as Canarsie. Despite complaints from the Canarsie Courier that Schultz has “no problem caffeinating people” in Kings Plaza, three miles away, there is still no branch of Starbucks here.
Mr G, a resident of the racially diverse Bay View housing estate that the Schultz family once called home, says that, in neighbourhoods like this, a five-dollar cappuccino with a tiramisu topping is a luxury item, not a daily necessity. “We’ve all heard about him here. We’ve heard about the plan to write it on the cup. He wants to get people together. Could be good. He should put a Starbucks here. Yes sir.”
So why hasn’t it happened? “Starbucks is too white, and they charge too much damn money.”
Criticism of Starbucks
In October 2012, Starbucks faced criticism after a Reuters investigation found that the company reportedly paid only £8.6 million in corporation tax in the UK over 14 years, despite generating over £3 billion in sales—this included no tax payments on £1.3 billion of sales in the three years prior to 2012.   It is alleged that Starbucks was able to do this by charging high licensing fees to the UK branch of the business, allowing them to declare a £33 million loss in 2011.  The UK subsidiary pays patent fees to the US subsidiary, purchases coffee beans from the Netherlands subsidiary (where corporation tax is lower than in the UK), and uses the Swiss subsidiary for other "miscellaneous services".  A YouGov survey suggested that Starbucks' brand image was substantially weakened by the controversy surrounding how much tax it pays in the UK several weeks after the allegations surfaced. 
Starbucks' chief financial officer (CFO) appeared before the Public Accounts Committee in November 2012 and admitted that the Dutch government granted a special tax rate to their European headquarters, which the UK business pays royalties to.  Dutch law permits companies to transfer royalties collected from other countries to tax havens without incurring taxes, unlike in the rest of the EU.  The CFO denied that they chose the Netherlands as their European headquarters to avoid tax, explaining that the company's Dutch coffee roasting plant was the reason for the decision.  Until 2009, the royalty rate was 6% of UK sales, but after being challenged by UK tax authorities it was reduced to 4.7%.  The CFO told the committee this reflected costs such as designing new stores and products, but admitted that there was no detailed analysis by which the rate is decided. The coffee they serve in the UK is purchased from the Swiss subsidiary, which charges a 20% markup on the wholesale price and pays 12% corporation tax on profits.  Coffee is not transported to Switzerland but the 30 people who work in the subsidiary assess coffee quality. Regarding Starbucks' frequent reports of loss in the UK, the CFO told the committee that Starbucks are "not at all pleased" about their financial performance in the UK.  MPs replied that it "just doesn't ring true" that the business made a loss, pointing out that the head of the business had been promoted to a new post in the US and they consistently told shareholders that the business was profitable.  
In Ireland, Starbucks' subsidiary Ritea only paid €35,000 in tax between 2005 and 2011 and the subsidiary recorded losses in every year other than 2011. Ritea is owned by Netherlands-based Starbucks Coffee Emea.  Their French and German subsidiaries make large losses because they are heavily in debt to the Dutch subsidiary, which charges them higher interest rates than the group pays to borrow. Reuters calculated that without paying interest on the loans and royalty fees, the French and German subsidiaries would have paid €3.4 million in tax. The Dutch subsidiary that royalties are paid to made a €507,000 profit in 2011 from revenues of €73 million, while the company that roasts coffee made a profit of €2 million in 2011 and paid tax of €870,000.  Protesters, who were unimpressed by the company's offer to pay £20 million in tax over the next two years, staged demonstrations in December 2012 in affiliation with UK Uncut.  In June 2014, the European Commission antitrust regulator launched an investigation of the company's tax practices in the Netherlands, as part of a wider probe of multi-national companies' tax arrangements in various European countries.  The investigation ended in October 2015, with the EC ordering Starbucks to pay up to €30 million in overdue taxes, which the EC regards as illegal state support for corporations.  A pair of economists from the KU Leuven noted that the Commission did not forbid Starbucks' tax construction as such, pretending that Starbucks is a Dutch company and effectively rewarding the Dutch state for its lenient tax policy. 
Some of the methods Starbucks has used to expand and maintain their dominant market position, including buying out competitors' leases, intentionally operating at a loss, and clustering several locations in a small geographical area (i.e., saturating the market), have been labeled anti-competitive by critics.  For example, Starbucks fueled its initial expansion into the UK market with a buyout of Seattle Coffee Company but then used its capital and influence to obtain prime locations, some of which operated at a financial loss. Critics claimed this was an unfair attempt to drive out small, independent competitors, who could not afford to pay inflated prices for premium real estate. 
Starbucks workers in seven stores have joined the Industrial Workers of the World (IWW) as the Starbucks Workers Union since 2004.  In line with a Starbucks Union press release, since then, the union membership has begun expanding to Chicago and Maryland in addition to New York City, where the movement originated.   On March 7, 2006, the IWW and Starbucks agreed to a National Labor Relations Board settlement in which three Starbucks workers were granted almost US$2,000 in back wages and two fired employees were offered reinstatement.    According to the Starbucks Union, on November 24, 2006, IWW members picketed Starbucks locations in more than 50 cities around the world in countries including Australia, Canada, Germany, and the UK, as well as U.S. cities including New York, Chicago, Minneapolis, and San Francisco,  to protest the firing of five Starbucks Workers Union organizers by Starbucks and to demand their reinstatement.
Some Starbucks baristas in Canada,  Australia and New Zealand,  and the United States  belong to a variety of unions. In 2005, Starbucks paid out US$165,000 to eight employees at its Kent, Washington, roasting plant to settle charges that they had been retaliated against for being pro-union. At the time, the plant workers were represented by the International Union of Operating Engineers. Starbucks admitted no wrongdoing in the settlement.  A Starbucks strike occurred in Auckland, New Zealand, on November 23, 2005.  Organized by Unite Union, workers sought secure hours, a minimum wage of NZ$12 an hour, and the abolition of youth rates. The company settled with the Union in 2006, resulting in pay increases, increased security of hours, and an improvement in youth rates.  In March 2008, Starbucks was ordered to pay baristas over US$100 million in back tips in a Californian class action lawsuit launched by baristas alleging that granting shift-supervisors a portion of tips violates state labor laws. The company plans to appeal. Similarly, an 18-year-old barista in Chestnut Hill, MA has filed another suit with regards to the tipping policy. Massachusetts law also states that managers may not get a cut of tips.   A similar lawsuit was also filed in Minnesota on March 27, 2008. 
Starbucks has been accused by local authorities of opening several stores in the UK in retail premises, without the planning permission for a change of use to a restaurant. Starbucks has argued that "Under current planning law, there is no official classification of coffee shops. Starbucks, therefore, encounters the difficult scenario whereby local authorities interpret the guidance in different ways. In some instances, coffee shops operate under A1 permission, some as mixed use A1/A3 and some as A3".  In May 2008, a branch of Starbucks was completed on St. James's Street in Kemptown, Brighton, England, despite having been refused permission by the local planning authority, Brighton and Hove City Council, who said there were too many coffee shops already present on the street.   Starbucks appealed the decision by claiming it was a retail store selling bags of coffee, mugs, and sandwiches, gaining a six-month extension,  but the council ordered Starbucks to remove all tables and chairs from the premises, to comply with planning regulations for a retail shop.  2500 residents signed a petition against the store,  but after a public inquiry in June 2009, a government inspector gave permission for the store to remain. 
A Starbucks in Hertford won its appeal in April 2009 after being open for over a year without planning permission.  Two stores in Edinburgh,  one in Manchester,  one in Cardiff,  one in Pinner and Harrow, were also opened without planning permission.  The Pinner cafe, opened in 2007, won an appeal to stay open in 2010.  One in Blackheath Village, Lewisham  was also under investigation in 2002 for breach of its licence, operating as a restaurant when it only had a licence for four seats and was limited to take away options. There was a considerable backlash from members of the local community who opposed any large chains opening in what is a conservation area. To this date, the Starbucks is still operating as a takeaway outlet.
Environmental protestors in Hong Kong in June 2018 extended their campaign against Maxim's Caterers to also target Starbucks. This is due to Starbucks awarding regional licences to Maxims in Hong Kong, Macau, Singapore and Vietnam.  On June 15, 2018 protestors targeted Maxim's headquarters in a demonstration that also highlighted Maxim's being a regional licensee for Starbucks.  
In October 2013, China Central Television accused Chinese Starbucks of over-pricing. The report compared the price of a tall (12 fl. oz., 354 mL) latte in Beijing, Chicago, London, and Mumbai. It was found that Beijing stores charged the most while Mumbai stores charged the least. It was also found that a tall latte cost 4 Chinese yuan (approx. USD .67) to make, but it sold at 27 yuan (approx. USD $4.50).  
In April 2016, a class-action lawsuit was pressed against Starbucks after multiple reported incidents of the company purposely underfilling their latte beverages to reduce milk costs.   After two years of legal proceedings, the lawsuit was dismissed.  
In October 2006, the British NGO, Oxfam, accused Starbucks of financially wounding Ethiopian coffee farmers by violating Fairtrade agreements. Specifically, Oxfam stated that Starbucks was depriving Ethiopian farmers of $88 million a year  by depriving the Ethiopian government of trademarking a number of its local coffee beans. Starbucks responded to the accusations by stating Oxfam's claims were misleading, and wished it would stop deceiving the public.  An analysis by SFK Inc., a supply-chain risk management firm, revealed that both Starbucks and Oxfam had validity to their claims. The firm found that the demand for Starbucks coffee exceeded the supply of Fair Trade coffee available, and that Starbucks made efforts to purchase Fair Trade coffee, when available. Additionally, it was found that Starbucks paid premium prices for Ethiopian coffee at the time, prices higher than market value.  The analysis further criticized not Oxfam or Starbucks, but the Fair Trade brand specifically, stating it as more of a "quick fix" to ease consumer guilt. While the firm acknowledged that the Fair Trade cause is noble, it was, however, lacking when pertaining aspects of regulation and supply-chain custody. The analysis further found that the Fair Trade brand comes with many miscellaneous fees, such as certification, inspections, and marketing, stating less of the money from the sale of Fair Trade makes its way to the farmers producing the product. 
SFK Inc. concluded that given the socio-political uncertainties of certain developing countries, external agreements within the government of such countries potentially opens the doors for corruption when farmer cooperatives are excluded from negotiation on their own behalf. The firm recommended that the coffee farmers produce directly for Starbucks, but non-exclusively, through a local subsidiary established by the brand. Such an agreement would allow Starbucks to fulfill its CSR goals, while ensuring Ethiopian specialty brands are recognized, and farmers are not subject to profit cuts from erroneous fees related to regulatory and bureaucratic procedures.  The solution was criticized by opposition, stating such a solution would provide Starbucks a monopoly advantage on Ethiopian coffee, and did not fit the requirements for Fairtrade, specifically. While the analysis acknowledged the criticism, it also stated that farmers were still able to export any part of their crop through the traditional channels, and that while the solution did not meet the specific requirements of Fairtrade, it did align with its ultimate goal: protecting farmers.  In May 2007, both Starbucks and the government of Ethiopia signed a licensing, distribution, and marketing agreement, recognizing the importance and integrity of Ethiopia's specialty coffee names.  These initiatives allow farmer cooperatives to earn more from its coffee brands, and enable poor growers to capture a greater share of the retail price. 
"War on Christmas" Edit
In November 2015, Starbucks introduced solid red seasonal cups, unlike previous seasonal iterations that were decorated with winter or Christmas-oriented imagery (such as reindeer and ornaments), but no overtly religious symbols. The cup design was discussed extensively on social media, with some citing it as another example of the "War on Christmas", calling it "cup-gate", and others expressed puzzlement over the outrage generated by a simple cup.    A man named Joshua Feuerstien then released a video suggesting that customers tell the baristas that their name was "Merry Christmas" so that baristas were forced to write it on the cups and shout "Merry Christmas" when calling off the drinks. This also started the trend #MerryChristmasStarbucks.  Donald Trump, on the campaign for presidency, was one of the first to declare the "War on Christmas" in one of his tweets.  This created a more politically charged meaning behind the controversy, due to Starbucks' reputation as a liberal corporation. The conservative tweets that attacked the release of the cup came during the campaign for the 2016 presidency and was seen as an attack on the liberal message of inclusion.  As a response to Feuerstein's video, people began the hashtag #ItsJustACup as a counter to the view that Starbucks "hated Christmas." 
#Racetogether marketing campaign Edit
On Monday, March 16, 2015,  Starbucks launched a marketing campaign to promote conversations about race between customers and employees.  This marketing campaign also called for baristas to write the hashtag #RaceTogether on customers' cups – similar to how Starbucks is already known for writing customers' names on each cup. It was characterised as a "fiasco" by some media outlets,     to the extent that Starbucks' vice president of public relations deleted his Twitter account.  On March 22, Starbucks CEO advised his employees there is no longer a need to write #racetogether on cups. Reuters reported that "Starbucks said the phase of the campaign that involved messages on drink cups was always scheduled to end Sunday."  
"The Way I See It" Edit
Quotes by artists, writers, scientists, and others have appeared on Starbucks cups since 2005 in a campaign called "The Way I See It".  Some of the quotes have caused controversy, including one by writer Armistead Maupin about coming out and another by Jonathan Wells that linked 'Darwinism' to eugenics, abortion and racism.  Disclaimers were added to the cups noting that these views were not necessarily those of Starbucks. 
There have been calls for boycott of Starbucks stores and products because it has been wrongly claimed that Starbucks sends part of its profits to the Israeli military,  but such allegations are based on a hoax letter attributed to the President, Chairman, and CEO of Starbucks Howard Schultz, who is Jewish  and supports Israel's right to exist.  He is a recipient of several Israeli awards including "The Israel 50th Anniversary Tribute Award" for "playing a key role in promoting a close alliance between the United States and Israel". 
The hoax letter claiming that Schultz had donated money to the Israeli military was actually written by an Australian weblogger, Andrew Winkler, who has admitted fabricating the document.   Starbucks responded to these claims, widely circulated on the internet, stating that "Neither Chairman Howard Schultz nor Starbucks fund supports the Israeli Army. Starbucks is a non-political organization and does not support individual political causes".  The protests against Starbucks derived from the Winkler letter were not the first earlier protests occurred in June 2002 in Cairo, Dubai and Beirut universities in response to Schultz's criticism of Yasser Arafat.  Starbucks has been a regular target of activists protesting against Israel's role in the Gaza War over the claims.
Organizations have urged a boycott of Starbucks, accusing Starbucks of serving as an ally of Israeli militarists.   Starbucks was forced to close a store in Beirut, Lebanon due to demonstrators shouting anti-Israel slogans and causing customers to flee.  Demonstrators hung several banners on the shop's window and used white tape to paste a Star of David over the green-and-white Starbucks sign. They also distributed a letter saying, Schultz ". is one of the pillars of the American Jewish lobby and the owner of the Starbucks," which they said donates money to the Israeli military.  On January 2009, two Starbucks stores in London were the target of vandalism by pro-Palestinian demonstrators who broke windows and reportedly ripped out fittings and equipment after clashes with riot police.   Starbucks, which previously operated locations in Israel, under a partnership with Delek Group of Israel,  stated that they did not close the Israeli locations due to political reasons, but due to market challenges. 
A US Marines Sergeant emailed ten of his friends in August 2004 having wrongly been told that Starbucks had stopped supplying the military with coffee donations because the company did not support the Iraq War. The email was shared online with tens of millions of people. Starbucks and the originator sent out a correction,  but Starbucks' VP of global communications, Valerie O'Neil, said in September 2009 that the email was still being forwarded to her every few weeks.   
As gun laws in many US states have become more relaxed, and more states have adopted open carry or concealed carry statutes, some gun owners have begun carrying guns while performing everyday shopping or other tasks. Many stores and companies have responded by banning the carrying of guns on their premises, as allowed by many states' local laws. Starbucks has not instituted an official policy banning guns in their stores. In 2010, the Brady Campaign proposed a boycott of Starbucks due to their gun policy.  At that time, Starbucks released a statement saying "We comply with local laws and statutes in all the communities we serve. That means we abide by the laws that permit open carry in 43 U.S. states. Where these laws don't exist, openly carrying weapons in our stores is prohibited. The political, policy and legal debates around these issues belong in the legislatures and courts, not in our stores."  
In 2012, the National Gun Victims Action Council published an open letter to Starbucks, asking them to revise their policy, and also proposed a "Brew not Bullets" boycott of the chain until the policy is changed, with Valentine's Day selected as a particular day to boycott the chain.   In response, gun rights advocates started a counter "Starbucks Appreciation Day" buycott to support Starbucks' stance, and suggested paying for products using two-dollar bills as a sign of Second Amendment support.  On July 29, 2013, Moms Demand Action for Gun Sense in America, initiated a petition demanding a ban on guns in Starbucks stores.  On September 17, 2013, founder and CEO Howard Schultz asked customers to no longer bring guns into its stores. He made the comments in an open letter on the company's website. Schultz said he was not banning guns, but making a request. 
Same-sex marriage Edit
In January 2012, a Starbucks executive stated that the company supports the legalization of same-sex marriage. This resulted in a boycott by the National Organization for Marriage, a political organization that opposes same-sex marriage, who received 22,000 signatures in favor of their boycott.  When another shareholder (who had been quoted by NOM before) mentioned during a meeting that recent earnings had been "disappointing" since the boycott began, CEO Howard Schultz responded: "If you feel, respectfully, that you can get a higher return than the 38 percent you got last year, it's a free country. You can sell your shares of Starbucks and buy shares in another company. Thank you very much."  In addition, 640,000 people also signed a petition thanking Starbucks for its support.  (As of June 26, 2015, same-sex marriage in the United States is legal in all states following the Supreme Court ruling in Obergefell v. Hodges.)    Muhammadiyah, the second largest Muslim group in Indonesia with 29 million members,  and Perkasa, a group with 700,000 members, have called for a boycott of Starbucks over its support of gay rights.   
On January 27, 2017,  President Donald Trump signed an executive order to indefinitely suspend the entry of Syrian refugees into the United States and suspended entry into the United States of nearly all citizens of seven countries until "extreme vetting" measures could be implemented.  The same day, Starbucks' Chairman and CEO Howard Schultz wrote a letter to Starbucks' employees, stating in part, "There are more than 65 million citizens of the world recognized as refugees by the United Nations, and we are developing plans to hire 10,000 of them over five years in the 75 countries around the world where Starbucks does business. And we will start this effort here in the U.S. by making the initial focus of our hiring efforts on those individuals who have served with U.S. troops as interpreters and support personnel in the various countries where our military has asked for such support."  As a result of Schultz's letter, supporters of President Trump's executive order supported a boycott of Starbucks, with some saying that Starbucks should give more help to American veterans.  
In March 2018, a California judge ruled that Starbucks and other companies must provide warning labels on all coffee products, warning consumers of chemicals that may cause cancer, a requirement by California law which Starbucks was found in violation of.   The chemical in question is acrylamide, a carcinogen byproduct of roasted coffee beans found in high levels throughout brewed coffee. Declining to comment, Starbucks instead referred to a statement by the National Coffee Association claiming that cancer warnings on products would be "misleading".  After the first phase of the trial, Starbucks may be subject to civil proceeding penalties of fines up to $2,500 per consumer exposed over the last eight years. 
On April 12, 2018, two African-American men, Donte Robinson and Rashon Nelson, were arrested in a Starbucks store in Philadelphia, Pennsylvania.  A witness at the time of the arrests said that the men asked the staff if they could use the bathroom to which an employee said it was reserved for paying customers. The men waited at a table for another person without ordering and were instructed by the staff to either make a purchase or leave. When they did not comply, the store manager called the police, saying the men were trespassing, which led to the arrests. They were released without charges being pressed.  The video of the arrest went viral and prompted the CEO of Starbucks Kevin Johnson to issue an apology. On ABC's Good Morning America, Johnson appeared for an interview and expressed his desire to meet with the men in person to apologize. He referred to the arrests as "reprehensible", and promised to take steps to prevent future incidents.  Philadelphia mayor Jim Kenney criticized the company and called for revisions of the company's policies.  The incident led to protests at the shop where the arrests occurred and caused outrage.   The company had announced that the store manager was no longer working at the store.   The police commissioner, Richard Ross Jr., said the police officers did nothing wrong, having made multiple "polite" requests for the men to leave before arresting them.  As tension grew, the cafe was closed for a few hours on April 16. 
After the event, Starbucks released a statement on plans to shut stores and corporate offices on May 29 for racial-bias education for approximately 175,000 U.S. employees.  On May 2, it was reported that the two men settled for a symbolic $1 each and a promise from City officials that a program for young entrepreneurs would be established.  This is separate from the Starbucks financial settlement that was announced in a joint statement between the two men, and Starbucks. In the settlement Starbucks has included the two men earn their bachelor's degrees with the tuition covered, and discuss their experience with former U.S. Attorney General Eric Holder as part of the company's diversity efforts. 
Starbucks worked with two organizations to plan the curriculum for the anti-bias training, SYPartners and the Perception Institute. The trainings took place in Starbucks stores and were unfacilitated. Participants used iPads and guidebooks to direct them. 
The anti-bias training was planned to be in collaboration with the Anti-Defamation League, a Jewish civil rights organization.  Tamika Mallory, a prominent activist and organizer of the 2017 Women's March, criticized the decision, accusing the ADL of "attacking black and brown people," further remarking in a tweet that "The ADL sends US police to Israel to learn their military practices. This is deeply troubling. Let's not even talk abt [sic] their attacks against [email protected]"  Starbucks was subsequently reported by Politico to have dropped the ADL from its anti-bias training, a decision that critics called "giving in to bigotry." A Starbucks spokesperson disputed that the change was in response to political pressure, saying it was "architecting a multi-phase approach to addressing bias." 
Starbucks ( SBUX ) CEO Howard Schultz is putting dysfunctional DC on notice, calling on Congress and the White House to "stop the polarization and dysfunction."
"Washington has let the country down," he said Sunday on NBC's "Meet the Press."
Instead, Schultz wants to see "civility and conversation and cooperation."
"If we don't get that in the next 30 days, the business community is going to do what they've done for the last 10 years: dismiss Washington," he said. "But we can't have that."
It's not the first time the Starbucks head has called foul amid political bickering.
As the nation teetered on the edge of the so-called fiscal cliff in 2012, Schultz urged lawmakers to "come together" by having DC-area Starbucks baristas write that message on coffee cups.
A year later, while Congress bickered into a two-week-plus government shutdown, he said he was "utterly disappointed by the level of irresponsibility and dysfunction" in the capital city.
And during the 2012 campaign, he and dozens of other CEOs pledged to cut off political donations until lawmakers "stop the partisan gridlock."
Schultz sent this message to Washington amid the fiscal cliff standoff.
Since the economic recovery is still looking for traction, it likely won't be the last time Schultz weighs in, either.
"I feel as if the economic situation that we are dealing with is directly linked to the situation in Washington in which there's been a fracturing of trust and confidence for over 10 years," he said Sunday.
The solution in the short term, he said, is for business leaders like himself to "to take the lead and do what we can to move the country forward."
Starbucks And Coronavirus: Lessons For All Retailers From The Company’s Response In China
People wearing protective face masks walk past a closed Starbucks coffee shop at a grocery in . [+] Beijing on January 29, 2020. - People in Beijing and across China are donning masks, spraying antiseptic and staying off the streets in a battle to halt the spread of a viral outbreak that has killed more than 130 people nationwide and gripped the country with fear of getting sick. (Photo by Noel Celis / AFP) (Photo by NOEL CELIS/AFP via Getty Images)
Hope is on the horizon, as Apple and Starbucks reopen stores in China now that COVID-19, officially classified as a global pandemic caused by the novel coronavirus, is starting to abate there.
While much of the country remains under strict government-forced quarantine to limit the virus’ spread, four provinces – Yunnan, Guangdong, Shanxi and Guizhou – have lowered their emergency response levels indicating that things can start getting back to normal.
On March 9, Jing Daily reported that China may soon have the disease under control thanks to its proactive public health measures. And some analysts predict government-imposed quarantine measures may begin to lift as early as the end of March.
China may have turned the corner
With the first quarter of 2020 in the tank, JP Morgan research analysts are hopeful for an economic recovery in the second quarter. According to China Daily, Jing Ulrich, the bank’s vice chairman of global banking and Asia-Pacific, predicts that the Chinese economy will grow 15% quarter-on-quarter from April to June, after contracting by 3.9% during the first three months of 2020, compared to the previous year.
“Although the resumption of work has been slower than anticipated, we expect that economic activities will rebound from late March and into the second quarter,” she said, adding that extensive factory shutdowns have created havoc in global supply chains.
The hard-hit luxury sector is beginning a slow recovery as well, according to reporting by Bloomberg. Within the hubs of luxury shopping, store traffic, which fell as much as 80% earlier this year, has begun to return.
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Hermès International CEO Axel Dumas said he foresees “potential normalization” of operations with seven of its 11 stores in China beginning to resume operations.
Micaela Le Divelec Lemmi, CEO of Salvatore Ferragamo, reported a slow but measurable improvement to business, as well: “On top of the traffic, the mood of customers will also be relevant. After a month and a half of closures and restrictions, there is a will to come back and have a real life.”
In more positive news, Apple just announced it was reopening all 42 of its stores in China after being closed for a month. This follows news last week out of Starbucks that 90% of its roughly 4,200 stores in China have reopened.
Starbucks pulls back the curtain
In a letter to investors, Starbucks CEO Kevin Johnson and CFO Patrick Grismer were refreshingly transparent about how coronavirus disrupted “business as usual” in the Chinese market.
Though Starbucks doesn’t report sales in China, its 2019 annual report said that China, “contributes meaningfully to both consolidated and international net revenues and operating income. China is currently our fastest-growing market and second-largest market overall.”
The letter provides a look at the impact of the disruption to Starbucks’ business there and guidance for how other companies can prepare as COVID-19 continues to spread into other global markets.
“In recent weeks, the world has been grappling with an issue of enormous scale and human impact, and our hearts go out to all who have been affected by the outbreak of coronavirus disease (COVID-19),” they wrote.
“We will continue to be thoughtful and responsible in how we prioritize the health and well-being of our partners (employees) and customers, support local health officials as they work to contain the virus, and serve our local communities,” they said, and continued, “We believe that the impacts to our business are temporary.”
Preparing for the coronavirus spread
Johnson and Grismer reassured stakeholders that the lessons they learned from the outbreak in China will guide them in managing business in other markets where it rears its ugly head.
“We are prepared to respond to any situation that may unfold in any of our markets around the world, leveraging the considerable operational insights we’ve gains from our experience in China,” they said.
These protective measures include all Starbucks team members having daily temperature checks and required to wear masks at all times in the store. In addition, every Starbucks store entrance was equipped with a “safety station,” to automatically check customers’ temperatures as they entered and to provide masks for their use inside.
Team members were trained for a “Contactless Starbucks Experience” to avoid any direct contact with customers which encouraged the mobile-ordering capabilities. Enhanced store sanitizing protocols were put into place and seating was adjusted in the stores to maintain a safe distance between guests.
Six weeks of business disruption
As for its business, emergency health precautions caused Starbucks to close about half of its stores on January 29. Those closures, combined with already planned closures for Chinese New Year holiday, resulted in some 80% of its stores shuttered in early February.
Reporting that as of early March more than 90% of its stores are now open, they also said that a majority of its stores in China still are operating on a reduced schedule.
By month’s end, assuming no unforeseen reoccurrences of the disease, the company expects 95% of stores in China to be opened, but they will continue to operate with “elevated safety protocols and modified schedule.”
Short-term financial hit
The company has taken deep but short-term hits to its business in China. During the month of February, comparable store sales declined precipitously by 78% from previous year, with the sharpest decline occurring the second week of February.
However, by February 27 sales had begun to improve, with total weekly gross sales the last week in February rising 80%. Also in the last week of the month, mobile orders accounted for about 80% of sales.
In effect, the worst lasted only six weeks or so, with recovery expected to progress steadily through mid-year.
Overall, the company expects headwinds from COVID-19 to cost the company $400 million to $430 million in revenue from China in the second quarter of 2020 at month’s end.
At that time comparable store sales in China will be down approximately 50% over the previous year. By comparison last year, the China/Asia Pacific segment reported revenues of $1.3 billion, out of consolidated net revenues worldwide of $6.3 billion.
In closing, Starbucks also announced that planned store openings for fiscal year 2020 in China will be deferred to fiscal 2021, with more details to follow in its earnings call scheduled for April 28, 2020.
While the coronavirus contagion in China will have the biggest impact on the Starbucks’ second-quarter financials, the rest of the world will undoubtedly follow in the third quarter ending in June. Already business has been impacted in Japan, South Korea and Italy with store closures and reduced customer traffic.
And with its corporate headquarters in Seattle, the initial epicenter of the disease in the U.S., its impact threatens to spread across the country.
Already an employee in its Starbucks Reserve Bar there has been diagnosed with COVID-19 resulting in the store shutting down for a thorough cleansing. With plans to open the store shortly, the company’s elevated safety protocols will be put into place in that store, if not others.
This Starbuck’s update provides a clear picture of what the aftermath of the coronavirus will look like for any company with a major presence in China, as well as advance warning of what may descend on businesses worldwide in the next several months.
Retailers, in particular, need to get ready with advanced safety measures similar to Starbucks’ in anticipation of the need.
Until the pandemic subsides, all will have to hunker down and ride out the storm. But it is clear that the companies that will come out of it fastest will be the financially strong and best-prepared ones going into it, like Starbucks.
Starbucks Wants Employees To Start Conversations About Race With Customers
An internal meeting with Starbucks employees held three months ago stirred a powerful discussion on race in America. It has since prompted the company’s CEO Howard Schultz to officially extended the invitation to join the conversation to customers across the country.
On Monday, the coffee giant launched a new campaign called “Race Together,” which aims to tackle the polarizing topic through a series of steps built to stimulate action and encourage customers to engage in conversations on race with Starbucks baristas.
“[‘Race Together’] is an opportunity to re-examine how we can create a more empathetic and inclusive society -- one conversation at a time,” Schultz said in a statement on the company’s website.
Starbucks has sparked and sustained a growing discussion on race among its employees after Schultz held an internal meeting at the company’s headquarters in Seattle, following the deaths of unarmed black men in Ferguson, Missouri, and Staten Island, New York.
More than 400 employees attended the impromptu meeting in December 2014 and were given an open forum to candidly discuss race among their colleagues and share ideas and solutions on how to address the topic through a collective, company-wide mission.
“This was not about demanding change, but demonstrating a willingness to embrace change and begin to bridge the divide to empathy,” Linda Mills, a Starbucks spokeswoman, told The Huffington Post in an email.
“As these events came to an end, we realized that this is the beginning of a conversation and one we intend to continue as a company into the future.”
As part of the campaign, baristas are encouraged to engage in conversations on race with customers and distribute branded cups with the words “Race Together” handwritten on them.
"If a customer asks you what this is, try to engage in a discussion that we have problems in this country in regards to race and racial inequality,” Schultz said in a video shared by the company this week.
The company has also partnered with USA Today to release a special newspaper supplement on March 20th, which will include “conversation starters” that also urge customers to carry the discussion online using the hashtag #RaceTogether.
According to newspaper, readers will also be asked to fill in a blank in one question: “In the past year, I have been to the home of someone of a different race ___ times.”
Schultz -- who has involved the company in several previous political discussions including a petition urging the end of the federal government shutdown as well as a pledge to hire more veterans, has been vocal on national debates but perhaps none as sensitive as the topic of race.
"The enduring success of Starbucks has been made possible because we as an organization, collectively and individually, have taken our company personal -- who might be different from you but doesn't have the same chance, the same opportunity and for that manner, may feel a sense of helplessness because of the unconscious bias people have towards that person," Schultz said.
CORRECTION: A previous version of this article misstated the location of Seattle.
Starbucks Company Timeline
Starbucks opens first store in Seattle’s Pike Place Market.
Howard Schultz joins Starbucks as director of retail operations and marketing. Starbucks begins providing coffee to fine restaurants and espresso bars.
Schultz travels to Italy, where he’s impressed with the popularity of espresso bars in Milan. He sees the potential to develop a similar coffeehouse culture in Seattle.
Schultz convinces the founders of Starbucks to test the coffeehouse concept in downtown Seattle, where the first Starbucks Caffè Latte is served. This successful experiment is the genesis for a company that Schultz founds in 1985.
Schultz founds Il Giornale, offering brewed coffee and espresso beverages made from Starbucks® coffee beans.
Il Giornale acquires Starbucks assets with the backing of local investors and changes its name to Starbucks Corporation. Opens in Chicago and Vancouver, Canada.
Total stores*: 17
*All store counts (except where otherwise noted) reflect the end of the fiscal year. Current store count includes Starbucks Coffee, Seattle’s Best Coffee, Teavana and Evolution Fresh retail.
Offers full health benefits to eligible full- and part-time employees, including coverage for domestic partnerships.
Total stores: 33
Total stores: 55
Starbucks expands headquarters in Seattle.
Unveils Starbucks Mission Statement.
Total stores: 84
Becomes the first privately owned U.S. company to offer a stock option program that includes part-time employees.
Opens first licensed airport store at Seattle’s Sea-Tac International Airport.
Total stores: 116
Completes initial public offering (IPO).
Total stores: 165
Opens roasting plant in Kent, Wash.
Announces first two-for-one stock split.
Total stores: 272
Opens first drive-thru location.
Total stores: 425
Begins serving Frappuccino® blended beverages.
Opens first LEED-certified store in Hillsboro, Oregon.
Announces second two-for-one stock split.
Opens roasting facility in York, Pa.
Total stores: 677
Begins selling bottled Frappuccino® coffee drink through North American Coffee Partnership.
Opens stores in: Japan (first store outside of North America) and Singapore.
Total stores: 1,015
Establishes the Starbucks Foundation.
Opens stores in: the Philippines.
Total stores: 1,412
Extends the Starbucks brand into grocery channels across the U.S.
Opens in underserved neighborhoods through joint-venture partnership with Magic Johnson.
Establishes the CUP Fund emergency financial assistance fund for partners.
Opens stores in: England, Malaysia, New Zealand, Taiwan and Thailand.
Total stores: 1,886
Acquires Tazo Tea.
Partners with Conservation International to promote sustainable coffee-growing practices.
Acquires Hear Music, a San Francisco–based music company.
Announces third two-for-one stock split.
Opens stores in: China, Kuwait, Lebanon and South Korea.
Total stores: 2,498
Establishes licensing agreement with TransFair USA to sell Fairtrade certified coffee in U.S. and Canada.
Opens stores in: Australia, Bahrain, Hong Kong, Qatar, Saudi Arabia and United Arab Emirates.
Total stores: 3,501
Introduces ethical coffee-sourcing guidelines developed in partnership with Conservation International.
Introduces the Starbucks Card.
Announces fourth two-for-one stock split.
Opens stores in: Austria, Scotland, Switzerland and Wales.
Total stores: 4,709
Establishes Starbucks Coffee Trading Company (SCTC) in Lausanne, Switzerland.
Launches Wi-Fi in stores.
Opens stores in: Germany, Greece, Indonesia, Mexico, Oman, Puerto Rico and Spain.
Total stores: 5,886
Acquires Seattle Coffee Company, which includes Seattle’s Best Coffee® and Torrefazione Italia® coffee.
Opens roasting facilities in Carson Valley, Nev., and Amsterdam, Netherlands.
Opens stores in: Chile, Cyprus, Peru and Turkey.
Total stores: 7,225
Opens first Farmer Support Center in San Jose, Costa Rica.
Introduces Starbucks Coffee Master Program.
Opens stores in: France and Northern Ireland.
Total stores: 8,569
Acquires Ethos Water.
Announces fifth two-for-one stock split.
Opens stores in: Bahamas, Ireland and Jordan.
Total stores: 10,241
Launches the industry’s first paper beverage cup containing post-consumer recycled fiber.
Opens stores in: Brazil and Egypt.
Total stores: 12,440
Eliminates all artificial trans fat and makes 2 percent milk the new standard for espresso beverages.
Opens stores in: Denmark, the Netherlands, Romania and Russia.
Total stores: 15,011
Chairman Howard Schultz returns as chief executive officer and begins transformation of the company.
Acquires Coffee Equipment Company and its Clover® brewing system.
Adopts new Mission Statement “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”
Launches My Starbucks Idea, Starbucks first online community. Also joins Twitter and debuts Starbucks Facebook page.
Opens stores in: Argentina, Belgium, Bulgaria, Czech Republic and Portugal.
Total stores: 16,680
Launches Starbucks VIA® Instant
Opens Farmer Support Center in Kigali, Rwanda.
Launches My Starbucks Rewards® loyalty program and Starbucks Card mobile payment.
Opens stores in: Aruba and Poland.
Total stores: 16,635
Expands digital offerings for customers with free unlimited Wi-Fi, Starbucks Digital Network.
Seattle’s Best Coffee reinvents business strategy to extend brand’s reach.
Opens stores in: El Salvador, Hungary and Sweden.
Total stores: 16,858
Launches first annual Global Month of Service to celebrate company’s 40th anniversary.
Opens first Community Stores in Harlem and Crenshaw neighborhoods.
Launches Starbucks® K-Cup® packs.**
Acquires Evolution Fresh.
Opens Farmer Support Center in Mbeya, Tanzania.
Launches Create Jobs for USA to encourage small-business growth.
Opens stores in: Guatemala, Curacao and Morocco.
Total stores: 17,003
** Keurig, K‐Cup, and the K logo are trademarks of Keurig Green Mountain, Inc., used with permission.
Introduces Starbucks® Blonde Roast.
Opens Farmer Support Centers in Manizales, Colombia and Yunnan, China.
Acquires La Boulange® bakery brand to elevate core food offerings.
Launches Starbucks Refreshers® beverage platform.
Acquires Teavana to transform the tea category.
Opens stores in: Costa Rica, Finland, India and Norway.
Total stores: 18,066
Starbucks' campaign to talk race with baristas starts slowly
(FILES)People use their laptop computers at a Starbucks in Washington, DC, in this May 9, 2012 photo. Starbucks customers can now add discussion about racism to their latte order. In an initiative that has raised some eyebrows, the head of the US coffee shop chain has called on baristas in the United States to discuss the sensitive issue with customers. Starbucks CEO Howard Schultz launched the "Race Together" program, saying the United States needs a "new level of sensitivity, understanding around these issues." The announcement prompted a surge of comment online March 17, 2015, with some people questioning whether an expensive coffee shop is the best place to start a discussion about race. AFP PHOTO/Jewel Samad / FILESJEWEL SAMAD/AFP/Getty Images Jewel Samad/AFP / Getty Images
It&rsquos easier to make coffee than to make the world better, Starbucks was finding out Tuesday as its new foray into race relations got off to a decaffeinated start.
The coffee chain, in a widely publicized campaign, is encouraging its baristas to talk to customers about race relations. Baristas are supposed to scribble &ldquoRace Together&rdquo on customers&rsquo paper cups. Then, when customers ask what it means, baristas are supposed to &ldquostart a discussion about race,&rdquo according to instructions sent to all 12,000 stores.
In downtown Oakland, baristas were ready to start talking.
&ldquoWe&rsquore going to change things one cup at a time,&rdquo said the manager of the store at Broadway and Eighth Street, which has experienced its share of grief over racial strife. During protests last year over the police killing of an unarmed black man in Ferguson, Mo., the store had 13 windows broken.
&ldquoWe feel obliged to bring the community together,&rdquo said the manager, who asked to be identified only by her first name, Lexi. &ldquoFor many people, Starbucks is their community. Home, work and Starbucks. We want to help.&rdquo
Nobody asked, though. One customer, waiting for a cappuccino, said he wanted his cappuccino. Another woman said it was a good idea for people who had the time, but she didn&rsquot.
Lexi said it was up to individual baristas to chat with customers and to inscribe the provocative words on the cup, along with the coffee order. Nobody was being forced to do it.
Kate Pfeiffer, an auditor from Redding, was sipping tea on a stool by the door. She said she thought the new campaign was a good idea.
&ldquoIt&rsquos a touchy topic, but it needs to be talked about,&rdquo she said. &ldquoSome people might say Starbucks is just doing this for publicity. But I think it&rsquos worthwhile.&rdquo
What would she have talked about with her barista, if the barista had asked?
&ldquoI would have said we have a long way to go,&rdquo Pfeiffer said. &ldquoIt&rsquos good to be reminded about the problem on an everyday basis. Anything that keeps people talking to each other is good.&rdquo
Four blocks north, at the Starbucks at Oakland City Center, a barista named Joey said the store had received a roll of &ldquoRace Together&rdquo stickers, but he wasn&rsquot sure what to do with them. He said he had not yet been trained about the program, and he ducked into a rear room to chat with a supervisor.
Starbucks Refuses to Join the Crowd
Just months after achieving its all-time high, the $100 billion coffee chain's stock seems to have lost its glow and has lost a good amount from its peak.
Starbucks (NASDAQ:SBUX) shares started to lose their luster back in September when the company trimmed its outlook for its next fiscal year, which started in October.
According to Bloomberg, the Seattle-based company reported in a presentation that its ongoing profit growth of 10% or more will not carry into next year for two reasons. First, the tax benefit the company had will end, and second, Starbucks will reduce its share buybacks.
As a result, Starbucks has lost about 12% in capitalization, or about $17 billion, since this announcement. Meanwhile, the S&P 500 broader index rose to new highs.
Meanwhile, the company reported in-line earnings results for its fourth-quarter operations. The coffee chain also recorded strong 6% comparable sales growth-- a crucial company metric of sales generated from stores that are open for 13 months or longer--compared to 4% a year ago. More impressively, Starbucks registered even stronger 5% comp sales in China, where heavy anti-government rallies have taken place in the recent quarter. Starbucks forecasts a bit lower comp figure for its next fiscal year at 3% to 4%.
Starbucks also projected earnings per share in the range of $2.84 to $2.89 in the coming fiscal year compared to $2.92 a year earlier.
The company also demonstrated strong adaptation to mobile delivery and pickup as it reported 7% of its sales mix was from Starbucks Delivers and 3% was derived from Mobile Order for Pickup. The company also recorded an 18% growth in its rewards loyalty program to 18 million active members.
Starbucks carried even a more leveraged balance sheet with $2.7 billion in cash and $11.2 billion in debt, having a negative equity of $6.2 billion compared to positive $1.2 billion a year ago.
For some reason, the company accelerated its buybacks for the fiscal year that just ended and had spent about $10 billion in share repurchases alone compared to its prior fiscal year buyback amount of $7 billion. Excluding the company's $1.8 billion in dividend payouts for the year, the $10 billion buyback amount is more than three times Starbuck's free cash flow. It probably is safe to assume the company has gone bananas in buying back its stock in the past 12 months. At this time, nothing seems more prudent than trimming back its buyback activities, which, of course, Wall Street disliked.
At $84 a share, Starbucks now trades on par with its historical average of a forward earnings multiple of 25. Overall, Wall Street has an average buy recommendation with a price target of $94 a share.
After reviewing its performance and guidance, investors may want to wait for a better entry point on Starbucks despite the price correction it has just suffered.
Disclosure: No shares in Starbucks.
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This article first appeared on GuruFocus.
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Crypto Hedge Funds Buy the Dip in Bitcoin’s Week of Reckoning
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Daimler Disagrees With Tesla and VW’s Batteries-or-Bust View
(Bloomberg) -- Daimler AG’s truck chief expects hydrogen-powered big rigs to play an important role in slashing emissions from the transportation sector despite the technological hurdles and skepticism raised by two prominent rivals.Focusing solely on battery-electric vehicles would be risky because of the scarcity of certain raw materials and challenges grids will have supporting wide-ranging charging networks for trucks and buses, Martin Daum, Daimler Truck’s chief executive officer, said in a phone interview.“We cannot afford to bank on just one technology to reach the climate goals,” Daum said. “The focus until 2025 will be 100% on battery-electric vehicles. Between 2025 and 2035, we’re going to need both battery-electric and fuel cell vehicles because the massively growing infrastructure requirements require a two-legged approach.”Fuel cells, which generate electricity from hydrogen and therefore eliminate the need to recharge batteries, have been touted for years as a potential alternative to combustion engines. But high costs and sparse fueling infrastructure have stood in the way of broader adoption and left the technology far behind battery-electric powertrains in the passenger-car market.Electrifying commercial vehicles is more complex -- they’re larger, heavier and used for everything from deliveries to supermarkets in urban areas to long-haul transport in remote areas. Daimler recently formed a joint venture with rival Volvo AB to jointly develop fuel cell stacks.Daimler’s DetractorsWhile prominent industry leaders including Tesla Inc.’s Elon Musk and Volkswagen AG’s Herbert Diess have repeatedly criticized fuel cells and argued battery power is the only way forward, Daimler and Volvo aren’t alone in seeing long-term potential.“Decarbonization of the energy mix represents the most profound shift in energy since the start of the industrial revolution,” Sanford Bernstein analysts led by Neil Beveridge said in a note to clients. “It is simply impossible to reach net zero by 2050 without hydrogen playing a major role.”Daimler’s truck division is the world’s largest maker of commercial vehicles and on track to be spun off from the Mercedes-Benz luxury-car operations this year. The split reflects the diverging technology trends between passenger cars and commercial vehicles. Both will need enormous investment in new technology to comply with stricter emissions standards.Daum, 61, mapped out more aggressive profitability targets on Thursday and objectives to generate the funds needed to navigate the industry’s transformation.“We want to be a resilient company that can avoid losses even in difficult years,” he said. The unit plans to list at the Frankfurt stock exchange later this year and could enter the country’s blue-chip DAX Index.Global PresenceDaimler boasts a truly global footprint that’s unique among commercial-vehicle manufacturers. While Volvo just trimmed its presence in Asia by selling its UD Trucks business in Japan, VW’s Traton SE unit is finishing its takeover of U.S. truckmaker Navistar International Corp. next quarter.Apart from Mercedes trucks, Daimler’s trucks and buses division comprises Fuso in Japan, BharatBenz in India, Setra in Germany and Freightliner, Thomas Built and Western Star in North America.The company has relied heavily on profits from Freightliner in recent years, as North America tends to generate much of the industry’s earnings. Executives said Thursday that boosting profitability at European operations will be a top priority and pledged to reduce personnel and material costs to become more competitive in the region.Asked whether Daimler may consider an acquisition of CNH Industrial NV’s Italian business Iveco, Daum said his focus is on the company’s own operations. “I don’t see the need for us to add an asset to our European business,” he said. “There are no plans for any structural changes.”More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Zara owner Inditex to close all stores in Venezuela, local partner says
Inditex, owner of brands including Zara, Bershka and Pull & Bear, will close all its stores in Venezuela in coming weeks as a deal between the retailer and its local partner Phoenix World Trade has come under review, a spokesperson for Phoenix World Trade said. Phoenix World Trade, a company based in Panama and controlled by Venezuelan businessman Camilo Ibrahim, took over operation of Inditex stores in the South American country in 2007. "Phoenix World Trade is re-evaluating the commercial presence of its franchised brands Zara, Bershka and Pull&Bear in Venezuela, to make it consistent with the new model of integration and digital transformation announced by Inditex," the company said in response to a Reuters request.
Musk says he supports crypto in battle with fiat money
Musk has previously compared bitcoin to fiat money and often tweets about cryptocurrencies that have sent values for bitcoin and the meme digital currency dogecoin up and down. In February, bitcoin shot higher after Tesla revealed it had bought $1.5 billion of the cryptocurrency and would soon accept it as a form of payment for cars.
Nvidia Shares Jump After Announcing 4-for-1 Stock Split
(Bloomberg) -- Nvidia Corp. shares jumped Friday after the graphics-chipmaker said it would split its shares 4-for-1 in an effort to make them more accessible to investors and employees.The split, in the form of a stock dividend, is subject to shareholder approval at the Santa Clara, California-based company’s annual meeting on June 3, Nvidia said in a statement Friday. The move, if approved, would increase the common stock to 4 billion shares. The shares jumped 3.1% as trading got underway in New York Friday.Currently Nvidia has about 622.4 million shares outstanding, valuing the company at $363.8 billion, based on Thursday’s closing share price of $584.50. The stock has gained 12% so far this year.If shareholders approve the plan, each Nvidia stockholder of record on June 21 will receive a dividend of three additional shares of common stock for every share held, to be distributed after the close of trading on July 19. Trading is expected to begin on a stock split-adjusted basis on July 20.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Hong Kong to restrict crypto exchanges to professional investors
HONG KONG (Reuters) -Cryptocurrency exchanges operating in Hong Kong will have to be licenced by the city's markets regulator and will only be allowed to provide services to professional investors, according to government proposals published on Friday. Investor protection and preventing money laundering are particular concerns. Dozens of cryptocurrency exchanges operate in Hong Kong, including some of the world's largest.
Apple App Store profits look ɽisproportionate,' U.S. judge tells CEO Cook
(Reuters) -A federal judge on Friday grilled Apple Inc Chief Executive Tim Cook over whether the iPhone maker's App Store profits from developers such as "Fortnite" maker Epic Games are justified and whether Apple faces any real competitive pressure to change its ways. Cook testified for more than two hours in Oakland, California, as the closing witness in Apple's defense against Epic's charges that the iPhone maker's App Store controls and commissions have created a monopoly that Apple illegally abuses. At the end of testimony, Judge Yvonne Gonzalez Rogers questioned Cook, pressing him to concede that game developers generate most App Store revenue and help subsidize other apps on the store that pay no commission.
CANADA FX DEBT-Canadian dollar nears 6-year high as inflation concerns ease
* Canadian dollar strengthens 0.2% against the greenback * For the week, the loonie is on track to gain 0.6% * Canadian retail sales rise 3.6% in March * Price of U.S. oil rises 1.9% TORONTO, May 21 (Reuters) - The Canadian dollar rose against its U.S. counterpart on Friday as investor worries about U.S. inflation receded and domestic data showed retail sales climbing in March, with the loonie moving closer to a six-year high notched earlier in the week. Canadian retail sales rose 3.6% in March from February, surpassing estimates for a 2.3% increase, data from Statistics Canada showed. World stock markets edged higher after a volatile week, taking their lead from a stronger Wall Street as U.S. business activity data tempered inflation fears.
UPDATE 4-Apple App Store profits look ɽisproportionate,' U.S. judge tells CEO Cook
A federal judge on Friday grilled Apple Inc Chief Executive Tim Cook over whether the iPhone maker's App Store profits from developers such as "Fortnite" maker Epic Games are justified and whether Apple faces any real competitive pressure to change its ways. Cook testified for more than two hours in Oakland, California, as the closing witness in Apple's defense against Epic's charges that the iPhone maker's App Store controls and commissions have created a monopoly that Apple illegally abuses.
“The fundamental problem is that the lens through which Congress approaches issues is reelection. The lifeblood of their reelection campaigns is political contributions.” Schultz concluded, “I am asking that all of us forgo political contributions until the Congress and the president return to Washington and deliver a fiscally disciplined long-term debt and deficit plan to the American people.”
“Rather than be bystanders, we have an opportunity—and I believe a responsibility—to use our company’s scale for good by sending a respectful and optimistic message to our elected officials to come together and reach common ground on this important issue,” wrote Schultz as he launched his first “Come Together” campaign.
The Coffee House – A History
Coffee was cultivated in Africa as early as the 9th century, but it did not reach Europe until the 17th century. However, when it did, it was met with many varying opinions. It still caught on like a wildfire, even with the people that detested its existence. The 18th century London coffee house was the center of controversy, in many ways, even to the point of the king trying to ban coffee and close the establishments. Being the place for political discussion, some of the policies of our newly formed country might have originated in one of these places.
Coffee did not come via a direct route from Africa, but found its way to Britain through Mediterranean trade routes with the Muslim world. Queen Elizabeth I irritated her European neighbors by opening up diplomatic relations with her new-found Moroccan and Ottoman friends, establishing good trading relations and sea-faring agreements. This trade allowed goods such as tea from Asia, coffee, and chocolate to filter into England. The Middle East had coffee houses over a hundred years before they ever appeared in England.
In 1652 Pasqua Rosee, the servant of a merchant trader and an immigrant from Ottoman Smyrna, opened the first coffee house in London, which later became known as “The Turks Head.” “Rosee’s coffee-house, in St Michael’s Alley, Cornhill, was located in the centre of the financial district of the City of London, and his first clientele were merchants of the Levant Company, the trading house that organised and regulated trade with the Ottoman Empire.” 1
In 1662, the “Great Turk Coffee House” opened, “Apparently, inside could be found a bust of Sultan Almurath IV himself, ‘the most detestable tyrant that ever ruled the Ottoman Empire.’ The customer could not only find coffee, tea and tobacco here, but also chocolate and a range of sherbets, which, according to the Mercurius Publicus (12-19 March 1662), were ‘made in Turkie made of lemons, roses, and violets perfumed.'” 5 Not only did the coffee catch on among the people, but so did some of the Turkish culture. Some people began to wear turbans in the coffee houses.
Possibly because of the Islamic culture, and for other reasons, coffee houses were viewed as a place for renegades of Christianity. The new interest in other cultures continued past the fascination of the Middle East all of the way to the Orient. The Georgian period is marked by an Asian influence in art, literature, and academics.
Coffee houses caught on very quickly, so by 1663 there were more than 83 coffee houses in London. By the beginning of the eighteenth century there were as many as five or six hundred.2 The Prussian nobleman Baron Charles Louis von Pollnitz, who visited London in 1728, described them as one of the great pleasures of the city. He describes how it is “a Sort of Rule with the English, to go once a Day at least” to coffee-houses “where they talk of Business and News, read the Papers, and often look at one another.” 2 Some very famous companies even started as coffee houses. Lloyds of London, an insurance brokerage company, began as Edward Lloyd’s coffee house on Tower Street around 1688.
Today when we think of a coffee shop, we think of Starbucks. However, the coffee shops of the past were drastically different with their Middle Eastern culture. One thing they have in common is the social aspect, a place for discussion of new ideas, and that is what we’ll look at next month.
The coffee house, which originated in the Middle East around 1511, began simply as a place to enjoy an exotic drink, coffee, but soon evolved into a place that helped change the course of history. Before coffee houses arrived in London, the normal social gathering place was a pub or tavern. The first attraction to coffee might have been its newness or the exhilaration from the caffeine, but quickly it became another reason to meet, and the coffee house was a place for socializing.
A traveler to London in 1668 remarked, “Coffee-Houses, which are very numerous in London, are extremely convenient. You have all manner of news there you have a good Fire, which you may sit by as long as you please you have a Dish of Coffee you meet your Friends for the transaction of Business, and all for a penny, if you don’t care to spend more.” 4
Some men spent so much time there that their mail was delivered directly to the coffee house! An interesting fact is that almost every coffee house allowed only male patrons, women being relegated to the home or elsewhere for coffee. Not allowing women into these coffee houses did cause a few problems, which were outlined in the “Women’s Petition Against Coffee” published in 1674. Really a mock petition, but rumors and claims against coffee drinking could have been taken serious whether or not they were true. And as stated in the previous quote, they charged only a penny for a cup of black coffee! This gave rise to their nickname, “Penny Universities.”
Women’s Petition Against Coffee
Soon there emerged a distinct difference between the pub and the coffee house, “Rumors of the health benefits of coffee were abundant, and coffee-houses encouraged sobriety, rational thought, and articulate political discussion, whereas taverns merely provided a haven for irreverence and intoxication.” 5 This wasn’t a place to escape the world and dull the senses, but rather a place to debate current events and create new ideas for how life should be. Until this time there did not exist a forum for the merchant or trading class to have such discussions.
The London Stock Exchange began with this atmosphere of bringing buyers and sellers together, setting market prices. The famous insurance underwriter, Lloyd’s of London, began in 1688 in a coffee house with Lloyd providing a free information service on shipping, publishing “Lloyd’s List.” It prospered as a place for marine insurance.6 And as far as politics are concerned, men met in the coffee house to discuss hot political topics, even stirring up fear in the king.
Some of our founding fathers may have sat in these coffee houses discussing the future of the colonies or how government should be, noting the pitfalls or failures of the monarchies of England and France. In 1675 King Charles II of England wrote a proclamation to have all of the coffee houses shut down however, after a struggle with the owners of the coffee houses and other businessmen the proclamation was overturn.
Almost as quickly as they sprang up, the London coffee houses began to decline. They…
“had served their purpose and were no longer needed as meeting places for political or literary criticism and debate. They had seen the nation pass through one of its greatest periods of trial and tribulation had fought and won the battle for individual freedom had acted as a steadying influence in an age of profligacy and had given us a standard of prose-writing and literary criticism unequalled before or since.” 7
In the 1500’s the worldwide coffee revolution began, and well after the decline of the London coffee house emerged a new generation, the “Starbuck’s Revolution.”
Proclamation for the Suppression of Coffee-Houses
Source: Ellis, Aytoun. The Penny University: A History of the Coffee-Houses. (London: Seeker & Warburg, 1956) 92.
BY THE KING: A PROCLAMATION FOR THE SUPPRESSION OF COFFEE HOUSES
Whereas it is most apparent that the multitude of Coffee-houses of late years set up and kept within this Kingdom, the Dominion of Wales, and Town of Berwick upon Tweed, and the great resort of Idle and disaffected persons to them, have produced very evil and dangerous effects: as well for that many Tradesmen and others, do therein misspend much of their time, which might and probably would otherwise be imployed in and about their Lawful Callings and Affairs but also, for that in such Houses…divers False, Halitious and Scandalous Reports are devised and spread abroad, to the Defamation of His Majestie’s Government, and to the disturbance of the Peace and Quiet of the Realm His Majesty hath thought it fit and necessary, That the said Coffee-Houses be (for the future) Put down and Suppressed, and doth…Strictly Charge and Command all manner of persons, That they or any of them do not presume from and after the Tenth Day of January next ensuing, to keep any Publick Coffee-house, or to Utter or sell by retail, in his, her or their house or houses (to be spent or consumed within the same) any Coffee, Chocolet, Sherbett or Tea, as they will answer the contrary at their utmost perils…(All licenses formerly granted to be revoked).
Given at our court at Whitehall, this Nine-and-twentieth day of December 1675, in the Seven and twentieth year of Our Reign.
The Espresso Revolution
Just as coffee houses spread all over Europe in the 17th century, they were also opened in America in the late 17th century. The Merchant’s Coffee House in Philadelphia, also known as the City Tavern, was the meeting place of some of the finest gentlemen of the time, including Washington, Jefferson, Franklin, Lafayette and John Adams. The Tontine Coffee House in New York, in similar fashion to Lloyds of London, became the home of the New York Stock Exchange. Not only were the coffee houses places of intellectual trading, but hubs of business and opportunity.
As coffee became more widely used and known, there arose many new inventions pertaining to the process of brewing coffee. So many, in fact, that there is a museum in London (the Bramah Museum of Tea & Coffee www.teaandcoffeemuseum.co.uk) that is filled with these devices. The original European and American coffee houses served traditional black coffee brewed by steeping the grounds in near boiling water, but in the early 1900’s there came about a new method that would revolutionize the coffee industry.
In Italy, Luigi Bezzera filed a patent for a machine that pushed steam and water through a “group” that held the coffee grounds in a filter. Later this patent was purchased by Desiderio Pavoni, and in 1905 the Pavoni company began manufacturing machines based on the Bezzera patent. In 1927 the first espresso machine was brought to America. This La Pavoni machine is still on display at the place where it was first installed, Caffe Reggio in New York, with a title of “Home of the Original Cappuccino.” Although this method increased the speed dramatically, from a brewing time of 4 minutes to about 20 seconds, hence the name espresso, the coffee tasted bitter because the steam was too hot.
Through more fine tuning of the idea, from Cremonesi to Rosetta Scorza to Achille Gaggia in 1946, we have the piston lever espresso machine. The Gaggia Coffee Bar in Italy was the first location to use these machines and to offer espresso along with the regular coffee. The modern age of coffee houses was born. And today, we have super automatic machines that can do everything, grinding the coffee and pouring the completed drink into the glass. It is these super automatic machines that Starbucks relies on every day.
The espresso machine and the Italian coffee house were two ingredients necessary to the formation of the coffee house giant, Starbucks, but oddly enough, Starbucks did not start out having anything to do with espresso. Named after Starbuck, the coffee loving first mate in Herman Melville’s Moby Dick, the company started out as a roaster and retailer of coffee beans, located in Seattle’s busy Pike Place Market. Starbucks Coffee, Tea, & Spice sold high quality coffee makers, from Hammarplast, for patrons to use at home, but focused on roasting high quality coffee beans from regions around the world and not on preparing the coffee.
Their mentor was Alfred Peet who had his store, Peet’s Coffee & Tea, in Berkeley, CA, which was also only a roaster and retailer of fine Arabica beans. As their customer base grew, Howard Schultz, the VP and US manager for Hammarplast, took notice of their quickly increasing sales numbers and soon paid them a visit. By this time Starbucks already had four stores in the Seattle area, was profitable every year, and was buying more from Hammarplast than Macy’s. Schultz was so impressed by the founder’s passion and authenticity that he even stated there was something magic about the place, and so he wanted to go to Seattle and work for them. It took over a year of courting before they finally agreed to let him take over as head of marketing.
A couple of years after he was hired to this position the company sent him to Milan, Italy, to attend a trade show. While he was walking from his hotel to the convention he discovered something – the Italian coffee house, which actually in Italy is a coffee bar. There was Italian opera music playing in the background, the smiling barista making the espresso drinks and socializing with the clientele, and surprisingly very few chairs. He was struck by the large number of coffee bars in this town and how they were all bustling with activity. He was inspired and brought his passion back to Seattle, where it was met with great distaste and resistance. Starbucks was a roaster, not a restaurant or bar the beverage business would distract them their mission as a coffee retailer. The answer, “NO.” At the same time the owners were excited about the opportunity that had opened up to purchase Peet’s Coffee and Tea, which they did.
Now traveling back and forth between the companies, Schultz still pursued the idea of a coffee bar. After a year, they finally agreed to allow an espresso machine in one location, and that day they served 400 people, well above their 250 customer average. In two months it grew to 800 people and the lines stretched outside the door. Even through this success, the original owners did not want to pursue this venture. Schultz decided the only thing he could do was leave and start his own company, Il Giornale Coffee Company. It did great and quickly grew to three profitable stores.
Starbucks Original Store Pike Place Market
In April of 1987 the owners of Starbucks decided to sell the business, one owner wanted to cash out and the other was going to focus on Peet’s Coffee & Tea, and he said that Peet’s was original and it was better. Schultz knew that he needed to purchase Starbucks, and after raising enough capital he did, afterwards changing the name of all of his Il Giornale coffee bars into Starbucks. His vision, dedication, and leadership skills propelled Starbucks into the world class company it has become.