Starbucks makes desperate move to win back employees

Starbucks (SBUX) has had a tense relationship with its employees over the past few years, especially after a recent change in management.

Starbucks first faced growing unionization efforts from its hourly employees in 2021 as they cited issues such as short staffing, low wages, harassment and unpredictable scheduling. Starbucks has previously tried to curb these unionization efforts, which has heightened tensions between the company and its employees.

💰💸 Don’t miss the move: SIGN UP for TheStreet’s FREE Daily newsletter 💰💸

By 2022, a report from the Wall Street Journal revealed that 25% of U.S. Starbucks baristas quit within the first 90 days on the job, up from 10% before the Covid pandemic. 

Related: Starbucks sends hard-nosed message to corporate employees

In January 2023, Starbucks faced criticism from its corporate employees after requiring them to work from the office three days a week after allowing them to work remotely full time.

Shortly after Brian Niccol took over as Starbucks CEO in September this year, he doubled down on the company’s current return-to-office mandate during his first staff address claiming that employees need to be working in the office “more often than not.”

In October, Starbucks even reportedly began threatening its corporate employees with job termination if they failed to adhere to the company’s return-to-office mandate.

Starbucks makes a major work policy change

Amid the recent changes, Starbucks is now expanding a new benefit for its hourly employees in the U.S. to help attract and retain talent after recently scaling back a few other crucial job perks.

Beginning in March 2025, Starbucks will be “more than doubling” its paid parental leave for store employees who work an average of 20 hours or more each week, according to Niccol’s latest message to employees.

Augusta, Georgia, Starbucks Coffee, Baristas at work making drinks.

Jeff Greenberg/Getty Images

Parents who give birth will receive up to 18 paid weeks off, while non-birth parents will be eligible for up to 12 weeks of paid parental leave.

Before, the policy only allowed hourly workers to receive six weeks of paid parental leave and up to 12 weeks of unpaid leave after birthing a child.

“No other retailer offers a better parental leave benefit for new parents,” said Niccol in the message. “Our benefit was already the best in retail, but after hearing from some partners who shared the leave as new parents wasn’t adequate, we reviewed the program and have decided we’re making a change.”

Related: Starbucks CEO has tough words for employees on return to office

The move from Starbucks comes after it reportedly warned its baristas last week that they should expect smaller pay raises this year as the company struggles with declining sales. Last month, Starbucks even informed its corporate employees that they will not be receiving their full bonuses this year, only 60% of it.

Despite recent cutbacks, Starbucks is dead set on not only attracting new workers but also maintaining its current workforce. Last month, it created a goal to fill 90% of retail leadership roles internally, which it hopes will encourage workers to elongate their careers at the company.

Starbucks is in a tough battle with low sales 

While Starbucks is making significant workforce changes, it is struggling to reverse shrinking sales in its stores.

In Starbucks’ fourth-quarter earnings report for 2024, the coffee chain’s comparable store sales in the U.S. declined by 6% year-over-year, contributing to a 3% year-over-year decline in its total revenues during the quarter.

More Retail:

Dollar Tree issues stern warning about its pricingFoot Locker sounds the alarm on a concerning customer behavior Amazon accused of concealing a major change to Prime delivery

The decrease in sales comes after Starbucks was recently hit with consumer complaints over its high menu prices and faced a boycott over alleged political connections in the Gaza War.

In response to the company’s recent poor performance, Niccol has launched his “Back to Starbucks” plan which involves pausing price increases, simplifying Starbucks’ menu, cutting down wait times for orders to four minutes or less, and other changes.  

Related: The 10 best investing books (according to stock market pros)