NEW YORK – Starbucks Corp (SBUX.O) Chief Executive Laxman Narasimhan has published an open letter calling for peace and blaming “misrepresentation” of the company’s views for vandalism at some of its stores, as the global coffee chain grapples with protests and boycott campaigns tied to the Israel-Gaza conflict and a union fight in the United States.
In the letter posted on Starbucks’ website on Thursday, Narasimhan did not mention the Middle East explicitly but said “conflicts in many parts” of the world had unleashed violence, hate, lies and “weaponized speech,” which the company condemns.
Cities around the world – including here in North America – have seen escalating protests. Many of our stores have experienced incidents of vandalism. We see protesters influenced by misrepresentation on social media of what we stand for,” Narasimhan wrote. “Our stance is clear. We stand for humanity.”
Starbucks was pulled into debates over the Middle East in October when the union working to organize the company’s U.S. baristas posted a message on social media expressing “solidarity” with Palestinians, shortly after an attack by Hamas.
The union quickly deleted the unauthorized post, but it spread rapidly online, sparking calls for boycotts by people on both sides of the Israel-Gaza conflict that has spanned decades. Critics accused Starbucks of not doing enough to distance itself from the union’s stance.
Narasimhan’s letter appeared aimed at addressing employees who have had to deal with customer complaints sparked by the spread of misinformation online tying Starbucks to a Middle East politics.
Simmering tensions between Starbucks management and a small but feisty union that supports a $23 per hour minimum wage have also boiled over, with Starbucks Workers United staging a one-day strike in November and accusing the company of illegal anti-union tactics.
Starbucks has denied wrongdoing but said this week it had proposed a new round of discussions with the union, representing a significant change of tone after months of bitter clashes.
ECONOMIC HEADWINDS
Narasimhan did not explicitly mention the labor tensions in his letter. He said his goal for 2024 was to “reinvigorate our partner culture” and that “it is time to re-stitch the fabric of the green apron for all partners,” referring to Starbucks’ signature employee attire.
Analysts say economic factors rather than publicity over protests or unions are primarily behind Starbucks’ recent share price decline.
The stock surged 27% in 2021 and the first half of 2022 as stimulus checks and post-lockdown euphoria drove customers back into cafes. But sentiment has turned more cautious amid worries over a potential global recession.
“While the controversy presents a challenge, we believe the prevailing share price pressure relates more directly to macro uncertainty,” J.P. Morgan analyst John Ivankoe wrote in a Dec. 2 note after meeting with Starbucks executives.
The Seattle company has acknowledged that U.S. same-store sales were below expectations in September and October, sending shares down 9% over the past month.
But on a Nov. 3 earnings call, Starbucks noted that October sales had seen an uptick, and said higher priced drinks and food were cushioning the impact of customers making fewer visits. Executives said they were “keeping a close eye” on consumer behavior but did not downgrade their forecast.
A rare bright spot has been in China, Starbucks third-largest market, where same-store sales were up 7% in the fourth quarter after COVID-19 restrictions eased.
