Is Starbucks Doomed?

Years ago, I wrote that Starbucks acts like it’s too big to fail. Now, by alienating people across the political spectrum, the multinational may be on course for extinction.

Photo by Zhijian Lyu on Unsplash

I once joked to someone that if former Starbucks CEO Howard Schultz had recognized the first stores to unionize in 2021, he would have won a Nobel Peace Prize.

I don’t actually know if that’s true, nor do I think he’d deserve it if it did happen. But I do wonder where Starbucks would be now if Schultz had responded differently to the unionization groundswell that began in Buffalo more than three years ago. If he had, Starbucks might have a clearer idea about what kind of company it is today, and how to position itself in an increasingly competitive coffee landscape.

Because I’m starting to think that Starbucks is fucked.

Starbucks’ brutal repression of its union movement—it has received hundreds of citations from the National Labor Relations Board, and has thus far failed to come to a deal with any of its more than 500 unionized locations—has resulted in several years of bruising publicity. In the process, the chain has alienated scores of customers who might have otherwise connected with its supposedly progressive ideals.

Likewise, many of new CEO Brian Niccol’s initiatives have seemingly failed to win back large shares of its customer base. Niccol launched a campaign in September 2024 to bring the brand “back to Starbucks.” While some of his initiatives make sense—like getting rid of overly complex menu options, and eliminating drink deals that overwork baristas—some of his ideas have fallen flat or faced pushback, like getting baristas to write shoppers’ names on their cups with Sharpies or banning non-customers from using the bathroom.

Although the chain claims that the campaign is being positively received, recently filed Q1 sales indicate that both “global comparable store sales” and “North America and U.S. comparable store sales” have declined by 4%. Meanwhile, MSN reported that Niccol “is set to earn $10 million in bonuses for just six months on the job.”

Most recently, Starbucks seems to have made itself a new enemy. Following a lawsuit filed last week by Andrew Bailey, the attorney general of Missouri, the chain now appears to be in the crosshairs of Trump-supporting Republicans.

I think back to that union moment in 2021 because, in hindsight, it seems like a pivotal turning point for the company. Right now, Starbucks is combatting union workers while earning the ire of conservative legislators and witnessing declining sales. The brand exists in a liminal state, one where it’s simultaneously fighting entities across the political spectrum, seemingly without any clear vision of what it stands for and values.

Companies without a clear vision of what they want to do fail. I’m starting to wonder if this moment marks the beginning of the brand’s inevitable—and irreversible—decline.

#1 (AND ONLY) ENEMY

For decades, Starbucks’ only real enemy was specialty coffee shops. The worst thing you could say about the megachain was that it was a corporate brand that roasted its beans to hell and likely shortchanged farmers for their coffee.

This is not to diminish the latter argument, because it’s important, so let’s give it some context: Starbucks isn’t transparent about what it pays for coffee. Three years ago, I wrote about the paradox of coffee pricing, and the most recent reporting I could find about Starbucks’ prices came from a 2019 Sprudge article written by Zac Cadwalader:

“[Starbucks’] average yearly prices for 2012, 2013, and 2014 [were] $2.56, $1.92, and $1.72, respectively. For context, the average yearly C-market prices for 2011 (when many of the Starbucks contracts would have been signed) through 2014 are $2.53, $1.75, and $1.26.”

Basically, Starbucks’ prices seem to hover just above the C-market, literally a few cents above the lowest amount it can pay. However, I’d argue this wasn’t much of a customer concern, nor should it be: If it was this hard for me, a coffee expert and journalist, to find this information, then we can’t reasonably expect most consumers to do the same.

Rather, I point this out to demonstrate that for years, Starbucks had no one to worry about except specialty shops. Even then, I think the distinction most customers made between the chain and independent shops was down to size (corporate versus small) and coffee quality.

Even when specialty seemed to be the only enemy, Starbucks noticed. Over the years, it has attempted to co-opt many specialty drinks and practices, like offering lighter roasts (Blonde Roast came out in 2017) and debuting drinks like the flat white in 2015 and the cortado just a few weeks ago.

While many of these launches missed the mark—the brand’s version of the cortado is so ridiculous that I asked one of the writers at Fresh Cup to delve deeper into it—it was hard to categorically hate on Starbucks. And that’s because of the perks and benefits it offered workers, many of which remain uncommon in small, specialty coffee businesses.

Starbucks offers healthcare coverage to employees working 20 or more hours a week, a significant perk in an industry that’s used part-time workers as a reason not to invest more in healthcare for baristas. Starbucks also provides gender-affirming care for transgender employees as part of its coverage. When I’d talk to people who worked at Starbucks about the company, their responses were generally, “The coffee is eh, but my healthcare and benefits are great.” I’d hear workers say they could make careers in coffee because of these policies.

A COFFEE BRAND WE USED TO KNOW

At least those were the kinds of sentiments I used to hear—but that was before Starbucks started weaponizing its most progressive policies against union workers.

In 2022, workers at a unionizing store in Oklahoma City say management implied that trans healthcare benefits would be taken away from unionized stores. Starbucks also implied that unionized stores would lose protection for workers who live in the U.S. under DACA, and issued threats that unionized workers could not transfer stores (an important perk for many, especially college students). After one store in Indiana unionized, a worker tweeted that all their safety mats were thrown in the trash.

All of this falls under a larger umbrella of alleged union-busting tactics. More than 500 stores have unionized since 2021, and not a single one has been able to work with the company to reach a first contract. In December, Starbucks Workers United launched a multi-store nationwide strike over disagreements about wage increases—or the lack thereof—that the company proposed during negotiations. Two weeks ago, both parties agreed to bring in a mediator to push negotiations forward.

Given Starbucks’ treatment of its workers, it’s worth questioning where the brand’s supposedly progressive policies came from in the first place. How much does Starbucks believe in their merit, when they’re immediately weaponized to punish workers who rally together?

I thought this quote from Mila Wade, a barista at a Starbucks in Indiana, provided a good summary of what’s happening. In talking about Starbucks’ healthcare plan, she told Vice: “...it definitely feels like they are using [their healthcare benefits] to continue to market their allegedly progressive image and have this captive workforce of highly-exploited, very poor trans people.”

This tension between progressivism and control came to a head during Schultz’s testimony in front of the Senate Committee on Health, Education, Labor and Pensions in 2023. Schultz was called in to talk about alleged anti-union activity at Starbucks, and it seemed like he took even the idea of a union at Starbucks as a personal affront.

During the hearing, Sen. Tina Smith of Minnesota noted that Schultz seemed “personally offended or insulted that anyone would question you or your company. It seems as if you feel that only bad companies should be unionized.”

But perhaps the most telling moment came when he was questioned by Sen. Mitt Romney, who pointed out how ironic it was that he and fellow Republican senators were essentially defending Schultz during the hearing. Schultz—a guy who’d considered running for president in 2020, but was nervous he’d siphon off votes from the Democrats and contribute to a Trump win—was now being fawned over by the right wing.

LOSING VALUE

But that was two years ago. Now, any goodwill that Republicans had for Starbucks seems to have vanished.

On February 11, Missouri Attorney General Andrew Bailey filed a lawsuit on behalf of the state against Starbucks, alleging that the megachain engaged in “systemic racial, sexual, and sexual orientation discrimination.” The lawsuit comes in the wake of the current administration’s attack on diversity, equity, and inclusion policies.

The lawsuit claims that “since 2020, Starbuck’s workface [sic] has become more female and less white,” and because of that, customers have to “pay higher prices and wait longer for goods and services.”

The AG offers no evidence for the latter claim; he cites employment demographic information for the former. In 2020, Starbucks’ employment numbers show that 47% of workers identified as Black, Indigenous, or people of color; in 2024, the percentage dipped to 46.5%.

Despite the fact that the percentage of Starbucks’ non-white employees has slightly decreased, Bailey asserts that the company makes hiring decisions based on “non-merit considerations,” which “will skew the hiring pool towards people who are less qualified to perform their work.”

Obviously, this is a bunch of nonsense. The AG’s arguments make no sense, and appear driven by ideological extremism and flawed anecdotal evidence. (I could see this guy saying something dumb like, “There are only women working at my local Starbucks, so that means they’re sexist!”) His argument also fails to consider that service jobs tend to skew less white and employ more women—not because of discriminatory practices against white people, but long-standing discriminatory practices against Black people and women.

But given how quickly other brands like Target have dropped their diversity, equity, and inclusion policies in the wake of Trump’s inauguration, I wonder how seriously we should take Bailey’s threat—or whether this will prompt Starbucks to abandon its own progressive policies.

If Starbucks does so, will employees stick around? The company is already experiencing customer complaints due to understaffing and long wait times, so what would an even further diminished workforce mean? Arguably, if Starbucks capitulates to conservative demands, we could see a departure of the labor force that made its success and rapid expansion possible.

NO VISION

I’m not advocating for Starbucks to fall in line with our two-party political system. Years ago, I wrote about how Starbucks acts like it’s too big to fail, and I wonder sometimes if that’s actually true. Right now, the biggest challenge facing Starbucks isn’t down to one financial quarter, one negotiation, or one lawsuit—it’s figuring out what the company stands for at all.

Without clarity on its vision and intent, Starbucks continues to shed allies and fight battles on multiple fronts. With the company’s profits in free fall, Niccol and the entire Starbucks corporate team are making reactive decisions based on what they think will immediately make money rather than longer-term strategies rooted in clearly stated values.

From what I’ve observed, these kinds of companies—without a vision, without a mission—are the ones that fail. I can only say that I wish for that not to be the case for the sake of Starbucks’ workforce.

Niccol’s gimmicky campaigns have all been rooted in the idea of getting “back to Starbucks,” imbued with a nostalgia for the era that made the brand one of the largest retail coffee chains in the world. But perhaps what made Starbucks successful all along was its investment in people—and no amount of naive yearning for an idealized past will course-correct a company that can’t recognize that.