Source: Gelonghui

Just before Christmas, in the USA,$Starbucks (SBUX.US)$the labor union announced a strike on Friday in three major cities: Los Angeles, Chicago, and Seattle, where the Starbucks headquarters is located, to protest issues related to wages, benefits, and staffing.

The union stated that the strike will spread in the coming days and is expected to cover hundreds of stores before Christmas unless the company reaches an agreement with the union.

A Texas Starbucks barista, Alhajabdi, pointed out in the union's statement: "No one wants to strike. This is a last resort, but Starbucks has violated its commitment to thousands of baristas, leaving us no choice."

Strike escalates.

On December 20 local time, the Starbucks Workers Union announced strikes in multiple cities in the USA to protest against Starbucks' unfair labor practices and low wages. This five-day strike began on Friday, causing Starbucks stores in Los Angeles, Chicago, and Seattle to close.

According to the statement, representatives expressed their willingness to return to the negotiating table to resolve the issues.

Philadelphia barista and negotiating representative Baldwin stated that Starbucks needs to invest in supporting its operational baristas.

My current hourly wage is $16.50, but the company announced a mere 2.5% raise next year, which is only an increase of $0.40 per hour, not even enough for a Starbucks beverage.

According to union reports, 98% of members voted in favor of the strike resolution on the 17th to demonstrate their determination to protest against "hundreds of unresolved unfair labor allegations." The Starbucks Workers Union currently represents employees from over 500 stores in the USA.

Union President Fox stated that although Starbucks claims to value all employees, they cannot accept wages that effectively invest in baristas and cannot resolve hundreds of unfair labor issues.

As early as February this year, the union reached a framework agreement with Starbucks for guiding organization and collective bargaining. Both parties began negotiations in April based on this framework, aimed at addressing several pending legal disputes.

In a statement issued by the union on the night of December 19, it was stated that since the commitment made in February, the company has publicly indicated multiple times that a contract would be reached by the end of the year; however, up to now, they have not proposed any sincere economic proposals to the employees.

However, regarding this strike, Starbucks stated that this week's negotiation meeting was "prematurely" concluded by the union.

Unfortunately, despite our progress, the union has not returned to the negotiating table. We are ready to continue negotiations to reach an agreement, but we need the union to come back to the table.

Facing severe challenges

As the largest coffee chain in the world, Starbucks has faced numerous challenges this year—sales have declined.

According to the latest earnings reports, Starbucks reported a revenue of 9.07 billion USD for the fourth quarter of fiscal year 2024, a year-on-year decline of 3.2%; net income was 0.91 billion USD, a year-on-year decline of 25.4%. For the entire fiscal year 2024, the company’s total revenue was 36.18 billion USD, a year-on-year increase of 0.6%; net income was 3.76 billion USD, a year-on-year decline of 8.8%.

In addition, the China region is also struggling to grow. In the fourth quarter of 2024, Starbucks China achieved a net income of 0.7837 billion USD, a year-on-year decline of 7%; same-store sales decreased by 14%, average transaction value dropped by 8%, and the number of orders declined by 6%. For the entire fiscal year 2024, Starbucks China had a revenue of 2.958 billion USD, a year-on-year decline of 1.4%. Same-store sales in Starbucks China saw a year-on-year decrease of 8%.

As for the significant decline, Starbucks Chief Financial Officer Rachel Ruggeri stated at the earnings conference that intensified competition and a weak macro environment have affected consumer spending.

In the previous third-quarter conference call, then-CEO Laxman Narasimhan explicitly pointed out that the industry experienced unprecedented store expansion and large-scale price wars over the past year, with some competitors even willing to sacrifice same-store sales and profitability, which significantly and permanently changed the market environment.

2023.$Luckin Coffee (LKNCY.US)$The price war between 9.9 and 8.8 yuan with Kud Coffee has prompted many coffee brands to follow suit. For example, Luckin Coffee launched a 2 cups for 9.9 yuan promotion, making the "9.9 yuan" activity a standard.

Starbucks, while insisting verbally that it does not participate in price wars, is actually reducing prices through a series of strategies. For instance, they have launched promotions such as "15 yuan off with a minimum purchase of 70 yuan," "69.9 yuan for three selected drinks for a limited time," and "49.9 yuan for two new coffee cups"; also participating in group buying activities on local life online platforms like Meituan, Ele.me, and Douyin, with some products' single cup discount prices even being "cut" to below 20 yuan.

Regarding the future of the China market, Brian Niccol, the newly appointed Chairman and Chief Executive Officer of Starbucks, stated that more time is needed to better understand the Chinese market and operations. However, it is clear that the competitive environment in the Chinese market is very fierce, and the macroeconomic environment is very severe, necessitating careful consideration on how to achieve growth both now and in the future.

编辑/jayden