Starbucks just can't seem to get its act together right now. Facing a drop-off in sales this past year -- which had to have been at least partly due to people tightening their budgets -- Starbucks decided to raise its prices. That strategy has backfired, and now Starbucks' stock sits at a 10-year low. Given the current economic climate, sales aren't likely to increase anytime soon.
CEO Howard Schultz has announced that the holidays could be particularly bad for the company, and it's going to make another $200 million in cost-cutting moves.
That's where most of the business stories end. But a little investigative research by our sister blog in Dallas revealed that these cost-cutting measures aren't going to happen by making stores more efficient or cutting management. Instead, they're cutting back on baristas.
After the jump, see how Starbucks is shortchanging its employees -- and, indirectly, its customers.
Per Unfair Park:
I had to read that again to comprehend that negative 3 percent means Starbucks is purposely planning to run a skeleton crew that's going to be overwhelmed should a store experience a rush it's not expecting or suddenly gets busy again.
The way each store determines how many people it schedules foreach shift is determined by a program that is tied to the cash
registers, which keeps track of the number of customers that are rung
up throughout the day. So let's say only 30 people buy something
during a single half-hour. The system recommends that that particular location post two
baristas on the
floor. Make it 50 transactions, and they earn another employee -- you
get the idea.
The store managers are expected to basetheir schedules around the forecasted customer flow from past weeks
and keep their "variance" to the "ideal" coverage, to about zero
percent... Over the coming weeks, the scheduled coverage is being slashed, as
managers are expected to start keeping that variance to -3
percent. Translation: Understaffing!
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Contrary to the excuses that Starbucks inept corporate management offers, Starbucks primary corporate management problem is declining same-store-sales. Same-store-sales have been declining since FY 2004 and have continued unabated through FY 2008 (in other words, it is not the current credit crisis). Declining same store sales of course erodes overall financial performance. Market over saturation is part of the problem but the majority of the declining same-store-sales problem is poor corporate marketing decisions that have, and are, actually driving existing customers to Starbucks competitors (non-free wifi, forced Pike Place Roast, limited/unavailable bold dark roast coffees, no express lanes, to-go dribble cups that soil customers clothes and auto upholstery, etc).
Current corporate management has done nothing to address these fundamental business problems. Current corporate management should be replaced.
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