Starbucks Union Problem Gets Worse – 24/7 Wall St.

Day by day, Starbucks faces more challenges from the union that is unionizing a number of its stores. Workers United, the organization Starbucks faces in the fight, focuses on its company-owned stores, which number about 9,000 in the United States. As a new CEO takes over Starbucks next year, the coffee shop company’s options will have narrowed. The union’s work will have accelerated quickly.

According to The New York Times, the union has won votes in 250 or 300 stores where workers want to join. The National Labor Relations Board has filed several complaints. Starbucks says it wouldn’t do anything to break the law. The record seems to say otherwise.

Laxman Narasimhan has just joined Starbucks as CEO in waiting. He will take over from on-again, off-again CEO Howard Schultz. Narasimhan may rue his decision. As he takes the reins on April 1 next year, he will need to decide if he should break with Schultz’s anti-union stance, of which Schultz remains a powerful figure. Schultz has pushed out CEOs before.

Narasimhan will need to weigh the economic costs of unionization with the cost of the fight, the morale of workers and the public’s perception. Many customers will sympathize with Starbucks workers with a low hourly wage. That could cause some customers to abandon Starbucks for McDonald’s, Dunkin’ Donuts or local coffee shops.

The union effort also complicates the company’s plans to add more locations. Potential workers may decide they do not want to work in new stores unless they can be part of the union. Recruitment could be complicated.

Narasimhan will be at the center of the union movement for most of next year. If he makes mistakes as workers try to unionize, he risks damage to the reputation and financials of Starbucks.

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