Coffee-shop chain Starbucks (SBUX) is giving a 2% raise to all salaried employees in North America this year, according to Bloomberg. Unlike previous years, when individual managers decided raises, this new approach applies uniformly across the company. The raise is part of the company’s effort to turn the business around by improving customer service, cutting wait times, and making stores more welcoming. To help fund these changes, Starbucks is asking its leadership to tightly manage costs and spending.
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According to Starbucks, customers are already noticing improvements in their store experience, and the company says it’s working hard to balance these investments with responsible cost control. That includes applying the 2% raise to a wide range of salaried workers, from corporate employees to manufacturing and distribution teams, as well as retail leadership like store managers. The company noted that this consistent approach to wage increases is part of its cost management strategy for the fiscal year ending in September.
To turn around six straight quarters of declining same-store sales, Starbucks CEO Brian Niccol is also updating the menu, hiring more in-store staff, and implementing new technology to speed up orders. Other recent moves include tighter dress codes for baristas, laying off 1,100 corporate employees, and relocating some staff to Seattle. Executives have also been given performance-based stock awards worth up to $6 million if they succeed in cutting costs and achieving turnaround goals quickly. As a result, analysts expect modest growth in comparable-store sales this quarter.
Is SBUX Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 14 Buys, nine Holds, and two Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average SBUX price target of $100.57 per share implies 8.7% upside potential.
