Business

Howard Schultz: Starbucks Is Battling for the ‘Hearts and Minds’ of Workers

Published

3 years ago

June 11, 2022

Howard Schultz: Starbucks Is Battling for the ‘Hearts and Minds’ of Workers

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After six years in retirement, Howard Schultz returned to the highest job at Starbucks in April — this time to attempt to restore rising worker unrest on the firm because it resists a unionization effort that’s sweeping the nation.

He’s additionally again as a result of he says the nation is going through a “disaster of capitalism,” and he believes management is required to “reinvent the function and duty of the general public firm,” he mentioned at The New York Occasions’s DealBook D.C. coverage discussion board on Thursday.

These excerpts have been edited and condensed for readability.

On why he returned

I got here again to reinvent the function and duty of a public firm at a time the place there’s a cultural and political change with regard to the disaster of capitalism — the wants, necessities of the worker in an organization right this moment.

I don’t need to be crucial however I’ve to be trustworthy that the federal government in some ways have left individuals behind. In case you name 1000’s of people who find themselves working for a paycheck right this moment and also you requested them about financial mobility and particularly in regards to the promise of nation, for essentially the most half they’re going to say it’s not out there to me. And for those who ask individuals, sadly, who’re Black or brown, they’re going to say with out query it’s not out there to me for essentially the most half.

If we take into consideration the previous, Starbucks created complete medical health insurance for our individuals 25 years earlier than the Reasonably priced Care Act. Fairness within the type of inventory choices for everybody, together with part-time employees. Free school tuition. We will go on and on, however the reality is these advantages, nearly as good as they’re and had been, will not be ok for the worker of right this moment, primarily as a result of Gen Z has a distinct view of the world. And in addition as a result of the federal government has not offered them with a pathway that they imagine they deserve.

On why he opposes unionization

Starbucks sadly occurs to be the proxy of what’s taking place. We’re proper in the midst of it. If an organization as progressive as Starbucks, that has completed a lot and is on the a hundredth percentile in our complete trade for advantages for our individuals, could be threatened by a 3rd celebration that signifies that any firm in America. Now, I’ve mentioned publicly I’m not anti-union, however the historical past of unions is predicated on the truth that corporations within the ’40s, ’50s and ’60s abused their individuals. We’re not in a coal mining enterprise; we’re not abusing our individuals.

However the sweeping subject within the nation is that companies will not be doing sufficient, and the enterprise is the enemy.

We don’t imagine {that a} third celebration ought to lead our individuals. And so we’re in a battle for the hearts and minds of our individuals.

Constructing a fantastic enduring firm is about one factor — the foreign money of belief.

On the state of the U.S. economic system

Once I take a look at fuel costs at $6 and attending to $7 a gallon, we’re on a collision course with time by way of how lengthy the American client — American household — can proceed to spend on the degree they’re. And so, it’s laborious to be optimistic until there’s a plan to get inflation beneath management.

On America’s relationship with China (Starbucks has 6,000 shops there)

Russia is an enemy of America, full cease. China, for my part, is a fierce competitor.

The truth that we’re saber rattling forwards and backwards between China and the U.S. by way of our diplomacy is so unhealthy. It’s so towards what the world wants.

With regard to the $360 billion of tariffs that Trump placed on, it’s past me why the president of the US doesn’t elevate these tariffs right this moment.

On the duty to talk up

Simply within the final couple of months we’ve three ongoing, important points. Now we have gun violence and the state of affairs in Uvalde and Buffalo. Now we have the upcoming state of affairs with the Supreme Courtroom by way of Roe v. Wade. And we’ve the continuing subject of immigration. These three points are on the minds of our individuals, and I can promise you they’re taking a look at Starbucks, and searching on the leaders of Starbucks, to face up for what they imagine is per the values and guiding ideas of our firm.

It will probably’t be handy. It will probably’t be about ringing the register.

On the planet we’re dwelling in, no firm, no C.E.O., can cover. Everybody is aware of every thing. All the things you say publicly or privately is on the market. And so, let’s make sure that you’re standing up for reality.

On the psychological well being disaster

In case you ask our individuals, what are the 2 or three largest advantages that Starbucks gives, No. 1 is Spotify. That’s what it’s. The second is Lyra Well being, and that’s psychological well being that we’re offering to our individuals.

We serve 100 million individuals at Starbucks, and there is a matter of simply security in our shops by way of individuals coming in who use our shops as a public rest room, and we’ve to offer a protected setting for our individuals and our clients. And the psychological well being disaster within the nation is extreme, acute and getting worse.

In the present day, we went to a Starbucks group retailer in Anacostia, 5 miles from right here, which is a group that sadly is emblematic of communities all throughout the nation which are disenfranchised, left behind. And right here’s Starbucks constructing a retailer for the group. Now, we had a round-table dialogue with the supervisor and different individuals, and we had been advised that from 12 to six p.m. right this moment — each day — there’s nobody on the road. Why? As a result of persons are afraid that their kids are going to get shot — 5 miles from the White Home.

I believe we’ve acquired to offer higher coaching for our individuals. Now we have to harden our shops and supply security for our individuals. I don’t know if we will hold our loos open.

Starbucks is attempting to unravel an issue and face an issue that’s the authorities’s duty.

On getting employees again to the workplace

I’ve been unsuccessful, regardless of every thing I’ve tried to do, to get our individuals again to work. I’ve pleaded with them. I mentioned I’ll get on my knees. I’ll do push-ups. No matter you need. Come again. No, they don’t seem to be coming again on the degree I need them to. And, you realize, we’re a really collaborative, artistic group. I notice I’m an old-school individual and this can be a totally different technology. I’m within the workplace at 7 a.m. and I depart at 7 at evening. I’m attempting to make an instance. I believe individuals will come again two to 3 days per week and that’s the way in which — that’s the way in which it’s. However the factor that I’m evaluating is, what’s the extent of productiveness? And you realize, it seems that persons are working at house.

What do you suppose? Is Starbucks a proxy for what is occurring in America? Tell us: dealbook@nytimes.com.

Business

Cookies, Cocktails and Mushrooms on the Menu as Justices Hear Bank Fraud Case

Published

4 minutes ago

January 15, 2025

Press Room

Cookies, Cocktails and Mushrooms on the Menu as Justices Hear Bank Fraud Case

In a lively Supreme Court argument on Tuesday that included references to cookies, cocktails and toxic mushrooms, the justices tried to find the line between misleading statements and outright lies in the case of a Chicago politician convicted of making false statements to bank regulators.

The case concerned Patrick Daley Thompson, a former Chicago alderman who is the grandson of one former mayor, Richard J. Daley, and the nephew of another, Richard M. Daley. He conceded that he had misled the regulators but said his statements fell short of the outright falsehoods he said were required to make them criminal.

The justices peppered the lawyers with colorful questions that tried to tease out the difference between false and misleading statements.

Chief Justice John G. Roberts Jr. asked whether a motorist pulled over on suspicion of driving while impaired said something false by stating that he had had one cocktail while omitting that he had also drunk four glasses of wine.

Caroline A. Flynn, a lawyer for the federal government, said that a jury could find the statement to be false because “the officer was asking for a complete account of how much the person had had to drink.”

Justice Ketanji Brown Jackson asked about a child who admitted to eating three cookies when she had consumed 10.

Ms. Flynn said context mattered.

“If the mom had said, ‘Did you eat all the cookies,’ or ‘how many cookies did you eat,’ and the child says, ‘I ate three cookies’ when she ate 10, that’s a false statement,” Ms. Flynn said. “But, if the mom says, ‘Did you eat any cookies,’ and the child says three, that’s not an understatement in response to a specific numerical inquiry.”

Justice Sonia Sotomayor asked whether it was false to label toxic mushrooms as “a hundred percent natural.” Ms. Flynn did not give a direct response.

The case before the court, Thompson v. United States, No. 23-1095, started when Mr. Thompson took out three loans from Washington Federal Bank for Savings between 2011 and 2014. He used the first, for $110,000, to finance a law firm. He used the next loan, for $20,000, to pay a tax bill. He used the third, for $89,000, to repay a debt to another bank.

He made a single payment on the loans, for $390 in 2012. The bank, which did not press him for further payments, went under in 2017.

When the Federal Deposit Insurance Corporation and a loan servicer it had hired sought repayment of the loans plus interest, amounting to about $270,000, Mr. Thompson told them he had borrowed $110,000, which was true in a narrow sense but incomplete.

After negotiations, Mr. Thompson in 2018 paid back the principal but not the interest. More than two years later, federal prosecutors charged him with violating a law making it a crime to give “any false statement or report” to influence the F.D.I.C.

He was convicted and ordered to repay the interest, amounting to about $50,000. He served four months in prison.

Chris C. Gair, a lawyer for Mr. Thompson, said his client’s statements were accurate in context, an assertion that met with skepticism. Justice Elena Kagan noted that the jury had found the statements were false and that a ruling in Mr. Thompson’s favor would require a court to rule that no reasonable juror could have come to that conclusion.

Justices Neil M. Gorsuch and Brett M. Kavanaugh said that issue was not before the court, which had agreed to decide the legal question of whether the federal law, as a general matter, covered misleading statements. Lower courts, they said, could decide whether Mr. Thompson had been properly convicted.

Justice Samuel A. Alito Jr. asked for an example of a misleading statement that was not false. Mr. Gair, who was presenting his first Supreme Court argument, responded by talking about himself.

“If I go back and change my website and say ‘40 years of litigation experience’ and then in bold caps say ‘Supreme Court advocate,’” he said, “that would be, after today, a true statement. It would be misleading to anybody who was thinking about whether to hire me.”

Justice Alito said such a statement was, at most, mildly misleading. But Justice Kagan was impressed.

“Well, it is, though, the humblest answer I’ve ever heard from the Supreme Court podium,” she said, to laughter. “So good show on that one.”

Business

SEC probes B. Riley loan to founder, deals with franchise group

Published

55 minutes ago

January 14, 2025

Press Room

SEC probes B. Riley loan to founder, deals with franchise group

B. Riley Financial Inc. received more demands for information from federal regulators about its dealings with now-bankrupt Franchise Group as well as a personal loan for Chairman and co-founder Bryant Riley.

The Los Angeles-based investment firm and Riley each received additional subpoenas in November from the U.S. Securities and Exchange Commission seeking documents and information about Franchise Group, or FRG, the retail company that was once one of its biggest investments before its collapse last year, according to a long-delayed quarterly filing. The agency also wants to know more about Riley’s pledge of B. Riley shares as collateral for a personal loan, the filing shows.

B. Riley previously received SEC subpoenas in July for information about its dealings with ex-FRG chief executive Brian Kahn, part of a long-running probe that has rocked B. Riley and helped push its shares to their lowest in more than a decade. Bryant Riley, who founded the company in 1997 and built it into one of the biggest U.S. investment firms beyond Wall Street, has been forced to sell assets and raise cash to ease creditors’ concerns.

The firm and Riley “are responding to the subpoenas and are fully cooperating with the SEC,” according to the filing. The company said the subpoenas don’t mean the SEC has determined any violations of law have occurred.

Shares in B. Riley jumped more than 25% in New York trading after the company’s overdue quarterly filing gave investors their first formal look at the firm’s performance in more than half a year. The data included a net loss of more than $435 million for the three months ended June 30. The shares through Monday had plunged more than 80% in the past 12 months, trading for less than $4 each.

B. Riley and Kahn — a longstanding client and friend of Riley’s — teamed up in 2023 to take FRG private in a $2.8-billion deal. The transaction soon came under pressure when Kahn was tagged as an unindicted co-conspirator by authorities in the collapse of an unrelated hedge fund called Prophecy Asset Management, which led to a fraud conviction for one of the fund’s executives.

Kahn has said he didn’t do anything wrong, that he wasn’t aware of any fraud at Prophecy and that he was among those who lost money in the collapse. But federal investigations into his role have spilled over into his dealings with B. Riley and its chairman, who have said internal probes found they “had no involvement with, or knowledge of, any alleged misconduct concerning Mr. Kahn or any of his affiliates.”

FRG filed for Chapter 11 bankruptcy in November, a move that led to hundreds of millions of dollars of losses for B. Riley. The collapse made Riley “personally sick,” he said at the time.

One of the biggest financial problems to arise from the FRG deal was a loan that B. Riley made to Kahn for about $200 million, which was secured against FRG shares. With that company’s collapse into bankruptcy in November wiping out equity holders, the value of the remaining collateral for this debt has now dwindled to only about $2 million, the filing shows.

Griffin writes for Bloomberg.

Business

Starbucks Reverses Its Open-Door Policy for Bathroom Use and Lounging

Published

8 hours ago

January 14, 2025

Press Room

Starbucks Reverses Its Open-Door Policy for Bathroom Use and Lounging

Starbucks will require people visiting its coffee shops to buy something in order to stay or to use its bathrooms, the company announced in a letter sent to store managers on Monday.

The new policy, outlined in a Code of Conduct, will be enacted later this month and applies to the company’s cafes, patios and bathrooms.

“Implementing a Coffeehouse Code of Conduct is something most retailers already have and is a practical step that helps us prioritize our paying customers who want to sit and enjoy our cafes or need to use the restroom during their visit,” Jaci Anderson, a Starbucks spokeswoman, said in an emailed statement.

Ms. Anderson said that by outlining expectations for customers the company “can create a better environment for everyone.”

The Code of Conduct will be displayed in every store and prohibit behaviors including discrimination, harassment, smoking and panhandling.

People who violate the rules will be asked to leave the store, and employees may call law enforcement, the policy says.

Before implementation of the new policy begins on Jan. 27, store managers will be given 40 hours to prepare stores and workers, according to the company. There will also be training sessions for staff.

This training time will be used to prepare for other new practices, too, including asking customers if they want their drink to stay or to go and offering unlimited free refills of hot or iced coffee to customers who order a drink to stay.

The changes are part of an attempt by the company to prioritize customers and make the stores more inviting, Sara Trilling, the president of Starbucks North America, said in a letter to store managers.

“We know from customers that access to comfortable seating and a clean, safe environment is critical to the Starbucks experience they love,” she wrote. “We’ve also heard from you, our partners, that there is a need to reset expectations for how our spaces should be used, and who uses them.”

The changes come as the company responds to declining sales, falling stock prices and grumbling from activist investors. In August, the company appointed a new chief executive, Brian Niccol.

Mr. Niccol outlined changes the company needed to make in a video in October. “We will simplify our overly complex menu, fix our pricing architecture and ensure that every customer feels Starbucks is worth it every single time they visit,” he said.

The new purchase requirement reverses a policy Starbucks instituted in 2018 that said people could use its cafes and bathrooms even if they had not bought something.

The earlier policy was introduced a month after two Black men were arrested in a Philadelphia Starbucks while waiting to meet another man for a business meeting.

Officials said that the men had asked to use the bathroom, but that an employee had refused the request because they had not purchased anything. An employee then called the police, and part of the ensuing encounter was recorded on video and viewed by millions of people online, prompting boycotts and protests.

In 2022, Howard Schultz, the Starbucks chief executive at the time, said that the company was reconsidering the open-bathroom policy.