Coffee giant Starbucks will cut employee holiday bonuses by 40% after 2020 was its worst year since the pandemic hit, according to reports.
The weak bonus, typically paid in December, reflects Starbucks' struggles in the fast-food industry as cash-strapped customers cut back on expensive lattes and Frappuccinos due to rising menu prices.
In particular, the Seattle-based company has been hit hard by continued issues across its chain, including extremely long wait times of up to 40 minutes for Java fixes and boycotts related to the company's perceived stance on the Gaza war. High is declining.
Many employees at the coffee chain will only be paid 60% of their total bonuses, according to people familiar with the matter. told Bloomberg.
Most employee bonuses are calculated based on personal and company performance, so even Starbucks employees who hit their personal goals this year will receive less pay because the company's profits are down. The official said.
The performance-based portion of bonuses takes into account sales and operating profits, according to documents reviewed by Bloomberg.
Starbucks' sales grew less than 1% in the fiscal year that ended Sept. 29, a far cry from the double-digit growth seen a year earlier. The company's operating profit for the same period decreased by 8%.
Starbucks' global same-store sales fell 2% this fiscal year, only the second decline in the past 15 fiscal years, with the first drop occurring in 2020 as lockdown restrictions hit the restaurant industry hard. did.
The sales failure was partially offset by a 2% increase in average customer spending thanks to price increases, but the company's new CEO Brian Nicol, who took over in September, has made the stores more welcoming. , is trying to rebuild Starbucks' business by making the space more comfortable. A comfortable space for customers, reminiscent of the chain's early days.
“It's clear that we need to fundamentally change our strategy to win back customers,” Nicol said on the company's latest earnings call. “We have a clear plan and are working quickly to get Starbucks back on track for growth.”
Starbucks did not respond to requests for comment.
So far, Nicol has called for more baristas to improve efficiency and reduce long lines, as well as creating a “third location” between work and home where customers can enjoy sweet treats at their leisure. They are also calling for store renovations to position Starbucks as a company. .
Bonus targets for U.S. employees range from 5% of base pay for rank-and-file employees to 45% of base pay for senior vice presidents, according to documents obtained by Bloomberg.
Starbucks' corporate performance is more weighted in bonus calculations for senior vice presidents and executives, so bonuses for those employees are likely to take a big hit.
Those senior positions will not be eligible for merit raises like other employees, the people said.
Starbucks stock has risen 7.5% since the beginning of the year to $100.68, well below the S&P 500's 27% growth over the same period.
