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May 29: Did It Work for Starbucks?

June 4, 2018    I   A. Bruce Crawley

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A. Bruce Crawley is president, CEO and principal owner of Millennium 3 Management, Inc. (M3M). Read More...

© kritchanut

This year, May 29 was no longer simply Army Day in Argentina, or the International Day of United Nations Peacekeepers, or Statehood Day in Rhode Island and Wisconsin, or even World Digestive Health Day.


No, on April 17, the world’s largest consumer coffee brand usurped public consciousness for those otherwise worthy annual celebrations. On that date, Starbucks announced it would be closing its “more than 8000 company-owned stores in the United States,” to conduct racial-bias education.” Such an activity, of course, was quickly conceived in the wake of the viral incident wherein Philadelphia police were called by a Starbucks store manager to arrest and forcibly remove two African-American patrons who had simply been waiting for a business associate to begin a meeting, on the store’s premises.


Rather than buying time, over the ensuing 41 days, to identify how best to address the public furor surrounding the incident, the Company instead caused millions of observers to mark the May 29 date on their calendars and to begin the running debate about the appropriateness of its yet-to-be-fully-defined crisis response. 


Curiously, during that period, the most significant policy statement from the company had to do with its semi-controversial, mid-May announcement that its employees, hereafter, would “let anyone use the restroom, even if they haven’t purchased anything.”


Through all of that, and an estimated $16 million of incident-related negative news coverage, observers waited to see just what the content of the training would be, whether it would favorably impact the quality of treatment of diverse Starbucks patrons and whether, based on those outcomes, they would justify the return of any wavering former customers to, again, comfortably patronize the coffee giant’s stores.


Now that the big event has come and gone, it’s fair to wonder if it was an effective first step toward restoring the brand’s former luster. In all of the carefully worded training announcements and mentions of “8000 company-store closings,” for example, there was very little attention paid to the fact that more than 7000 Starbucks’ licensed stores, operated by hotels, grocery stores and universities, would remain open and that the company had not finalized details about how and when the May 29 training content would be shared with those licensees. That would not be a problem other than the fact that Starbucks patrons are hard-pressed to know which of its uniformly branded stores are company-owned, and which are not.


They all simply look like “Starbucks” to the general public, many of whom, at least for the foreseeable future, will be coming into contact, unbeknownst to them, with “untrained” baristas. 


It also seems, in a perfect world, that there would have been much more training and public discussion about how the renewed commitment to fair treatment and diversity would be a component of the Starbucks ongoing business case for maximizing competitive advantage and increasing revenues and margins.


The more the company’s internal publics understand that, and how it may affect their own employee- and management-compensation levels, the more effectively they should be able to commit themselves to ensuring the success of the new approaches.


One additional issue for improving Starbucks’ ongoing relations with diverse communities is that the Company’s longstanding business model is based upon premium pricing and store location strategies, which focus especially on areas with “large middle- and upper-class populations,” according to the Panmore Institute. By design, therefore, Starbucks’ store location strategies contribute to its lack of familiarity with relatively lower-income, comparatively lower net-worth, populations.


In fact, the company’s now-infamous Philadelphia store was located in the city’s Rittenhouse Square, one of its most high-income communities, a neighborhood wherein the likelihood of baristas and managers developing working familiarity and comfort levels with black patrons is relatively remote.


So, did May 29th produce the desired outcomes for Starbucks? It’s clearly too early to make that call.


With a very diverse corporate board and several key senior management positions held by strong, diverse executives, however, the Company certainly recognizes that the “training event” must be considered just the beginning of its brand recovery efforts.


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