Starbucks to raise wages for U.S. workers in October

By Lisa Baertlein and Sruthi Ramakrishnan

(Reuters) – Starbucks Corp said it will raise worker pay in its U.S. stores this autumn, after employees accused the coffee chain of “extreme” cutbacks in work hours that they say are hurting morale and service.

The world’s biggest coffee chain will increase base pay for all U.S. baristas and managers at company-operated stores by at least 5 percent starting Oct. 3, Chief Executive Howard Schultz said in a letter to employees on Monday.

Starbucks, which recently announced price increases for some drinks, also will double the annual stock reward to hourly employees who have worked at company-operated stores for at least two years.

Combined, the steps will result in a wage hike of 5 percent to 15 percent for roughly 150,000 workers in 7,600 U.S. cafes, Starbucks said.

More than 12,800 people, including many self-identified Starbucks workers, have signed an online petition laying out the employee complaints.

Beyond worries about customer service and morale, petition commenters said they were not getting enough hours to make ends meet or to afford Starbucks benefits, including healthcare and college tuition reimbursement.

CEO Schultz said the company would address scheduling concerns.

“You have my personal commitment that we will work with every partner (employee) to ensure you have the hours you need,” he said.

The company, which has been grappling with cooling sales growth at its popular cafes, has repeatedly said there is no nationwide reduction in labor hours at the chain. Schultz did not directly reference the petition or employee concerns about labor hour cuts in his letter on Monday.

“Howard Schultz did not acknowledge or validate the labor crisis in the stores,” said petition author Jaime Prater, a Los Angeles-area Starbucks barista. “Until that is addressed, or simply acknowledged, my job isn’t finished.”

Seattle-based Starbucks has a reputation for offering better pay and benefits than many other chains.

As a result, it has been largely unaffected by a union-supported multiyear restaurant worker wage campaign that has helped spur minimum wage increases in major cities and states, as well as pay raises at companies like McDonald’s Corp.

Still, Starbucks is not immune from the pressure that rising wages is putting on restaurant operators, who now must compete to hire and keep the best workers.

“Restaurants have to step up and pay people more,” said BTIG restaurant analyst Peter Saleh.

Starbucks’ new fiscal year begins on Oct. 1. A company spokeswoman said it is moving merit increases to October 2016 from early 2017, but declined to say how this round of raises would differ from prior annual adjustments.

Starbucks already has announced $275 million in incremental employee and digital investments for 2015 and 2016. A significant portion of that is earmarked for wages.

The chain recently introduced potentially labor-saving technology that allows customers to order and pay for drinks and other products via mobile phones and other devices.

Starbucks shares were down 21 cents, or 0.4 percent, at $56.30 in afternoon trading on the Nasdaq.

(Editing by Jonathan Oatis)