It would be a safe bet that most of us thought the protests and strike at coffee giant Starbucks (SBUX) were a non-starter. With such a comparatively slim percentage of Starbucks locations and employees even involved, it was the kind of thing that would go nowhere quickly. But it seems the strike is escalating, and hitting Starbucks’ supply chain. This news did not faze shareholders, as Starbucks stock surged over 4% in Friday afternoon’s trading.
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Baristas stopped protesting outside Starbucks stores, and this time, a group of them took their protest on the road, heading to a Starbucks distribution center in York, Pennsylvania to protest instead. It is actually the largest such distribution center on the east coast, and supports every location in the northeastern United States.
The protesters then formed blockades to stymie trucks trying to deliver supplies to the distribution center, complete with giant banners reading “Grind to a Halt,” among other things. Starbucks rep Jaci Anderson delivered a familiar statement in response, saying, “As we’ve said, 99% of our 17,000 U.S. locations remain open and welcoming customers —including many the union publicly stated would strike but never closed or have since reopened. Regardless of the union’s plans, we do not anticipate any meaningful disruption. When the union is ready to return to the bargaining table, we’re ready to talk. The facts are clear, Starbucks offers the best job in retail, with pay and benefits averaging $30 per hour for hourly partners. People choose to work here and stay here—our turnover is less than half the industry average, and we receive more than a million job applications every year.”
Missing the Point
Interestingly, this ongoing strike also seems to underscore a key point that former CEO Howard Schultz knew and practiced routinely: listening to the employees. Hopes rose that Brian Niccol could do something similar, but his turnaround plans seemed to increasingly hinge on making the baristas carry more of the load, a point that goes against what Schultz once set up.
Sure, plans to update stores and bring back condiment bars worked out well. But forcing stronger dress codes, requiring adherence to scripted reactions, and forcing baristas to write “genuine” things on cups with threats of “repercussions” for failure proved to be much harder to swallow. The plan to revive Starbucks is proving tougher to execute than expected, and some are calling on Niccol to return to Schultz’s stance.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 12 Buys, seven Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 19.4% loss in its share price over the past year, the average SBUX price target of $95 per share implies 9.81% upside potential.
