Coffee giant Starbucks (SBUX) has long had labor troubles, and not just the obvious ones of several of its stores converting to union shops. In fact, Starbucks just got hit with a $35 million settlement to several of its New York City workers over issues of scheduling. Shareholders did not take this well either, and Starbucks shares slumped around 1.5% in Monday afternoon’s trading.
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Starbucks is set to pay out $35 million to over 15,000 workers, a settlement that is described as “…the largest worker protection settlement in New York City history.” The payment is in response to Starbucks failing to offer stable schedules, as well as cutting hours “arbitrarily.” Checks are expected to start arriving this winter, reports note, and will be extended to anyone who worked in a Starbucks in New York City from July 2021 to July 2024.
City investigators found that Starbucks had experienced “more than half a million alleged violations of the city’s Fair Workweek Law.” This law requires both retail and fast-food operations—both notorious for their unstable schedules—to give employees “…predictable schedules and advance notice of changes.” Given that a large portion of these violations seem to have taken place when New York City was in the grip of extreme COVID-19 restrictions—the state did not end its mask mandate on public transport until September 2022—it is not hard to wonder what proportion of these violations were done under color of law.
Labor Strike Expands
Meanwhile, all those union shops that Starbucks is facing down are apparently getting increasingly fired up. The number of striking locations recently expanded from 65 stores to 120. While this is still a vanishingly small percentage of Starbucks locations, the rate of expansion has to be concerning.
This also represents the longest strike in Starbucks history, and one that hit during the Black Friday rush. The union is pursuing about what you might expect, improved hours and wages, as well as resolution of unfair labor practice charges. With a growing number of shops coming in, the union may have more leverage than previously believed.
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 14.19% loss in its share price over the past year, the average SBUX price target of $95 per share implies 10.88% upside potential.
