If you’re planning to grab a quick coffee or pick up a gift, it’s best to call ahead — Starbucks has closed most of its stores across the US. The workers’ union, Starbucks Workers United, announced that a strike began on Friday in Los Angeles, Chicago, and Seattle, with plans to expand to hundreds of locations by Christmas Eve. With a network of 11,000 stores, the walkout could significantly impact sales. This marks the union’s first walkout over contract negotiations. While Starbucks initially resisted unionization, it adopted a more conciliatory stance in February. However, the company has faced allegations of retaliating against union organizers, closing stores, and delaying contract talks.
Earlier this month, the union rejected a company proposal that included no immediate wage increases for its baristas and only a 1.5% increase in future years. The president of the workers’ group, Lynne Fox, called that “an insulting offer.” She cited a disparity between the company’s compensation package for its new CEO, Brian Niccol, who will make over $100 million his first year, and that of its lowest-paid workers.
Starbucks and the workers’ union have been discussing the issue for several months, but a breakdown in negotiations this week led to the walkout. The union says it wants the company to honor its commitment to reaching a labor agreement this year and resolve hundreds of unresolved legal issues.
The union represents employees at 525 of the coffee chain’s 10,000 US stores, and it said more than 5,000 workers had already walked off the job. Starbucks workers in California were expected to hit the picket lines on Tuesday at nine locations, including Burbank, Van Nuys, Santa Clarita, and Highland Park.
The union said more workers may join the strike on Tuesday. This is a sign of growing discontent among service industry workers, where wages have stagnated and a number of firms have cut worker benefits and hours. Workers are also concerned about possible disruptions to their holiday shopping if the strike expands.
In a statement, Starbucks said it has a contingency plan to minimize interruptions to customer service and that the company would continue to support its employees. The company said it had reached agreements with unions at ten other locations this week and would resume negotiations with the Burbank location on Monday. The company also said it was disappointed that the union prematurely ended bargaining this week and is calling for a return to the table. The company’s stock was down 2% to $32.40 in early trading. This year, it has gained 26%, compared to a 4.5% rise for the S&P 500 index. The stock dropped from a high of more than $43 last November. xAI, an artificial intelligence start-up founded by billionaire Elon Musk, raised $6 billion in its series C funding round, putting its valuation at more than $40 billion.
