On the menu for Starbucks: DEI, layoffs, and its CEO’s corporate jet use

Starbucks CEO Brian Niccol is focused on bringing the company back to its roots. During his first shareholders meeting last week he repeated two of the concepts guiding his changes: a simpler company, and feedback from customers and workers.

Some of the plans are already in motion. In Starbucks cafes, he’s dropped menu items. He’s created delineation between “to-go” and “for here” customers, the latter of whom get their coffee served in ceramic mugs. Niccol also announced sweeping layoffs in an effort to cut the corporate payroll.

But the company is dealing with a frustrated union representing its baristas, attacks on its diverse hiring practices and criticism for allowing its CEO to be based away from the Seattle headquarters.

Diversity

Corporations are facing public relations battles over diversity, equity and inclusion policies, with the Trump administration as one of the more prominent antagonists. Those skirmishes have slipped into board rooms and the courts.

Another Seattle-area retail company, Costco, faced a shareholders proposal earlier this year that targeted its DEI policies. The National Center for Public Policy Research, a Washington, D.C.-based conservative think tank, pitched a proposal that if approved would have had Costco probe its DEI practices for legal risks. Costco shareholders rejected it.

Starbucks faced a proposal last week from a shareholder represented by Houston-based financial adviser Patron Partners. In short, they asked Starbucks to depoliticize its charitable giving, Patron Partners managing partner Rick Figueroa said during the meeting on behalf of the shareholder.

Through its Giving Match program, Starbucks matches any financial donations made by its employees, and hours they’ve volunteered. It has a few stipulations, as only 501(c)(3) public charities and registered charities in Canada qualify. The company also does not allow donations to professional and political organizations or those listed on the Southern Poverty Law Center hate group list.

The proposal requested an analysis on how Starbucks’ “contributions impact its risks related to discrimination against individuals based on their speech or religious exercise.” It also opposed Starbucks’ corporate partnership with the Human Rights Campaign, a pro-LGBTQ+ organization.

Leading up to the meeting, Starbucks’ board urged shareholders to vote against the proposal. It was overwhelmingly voted down.

During the Wednesday meeting, Niccol was also asked about a lawsuit filed against Starbucks in February by the state of Missouri. The lawsuit claims the company’s hiring practices are discriminatory. Starbucks has said the allegations were inaccurate and that the company’s hiring practices are inclusive and competitive.

“I think it’s great that we reflect the diversity of our customers and we reflect the diversity of our team members and partners that are in every single one of our stores,” Niccol said. “Diversity is going to continue to be a key strength of our business and frankly, helps us connect with our customers at another level.”

Union contract

Last Tuesday, six union-represented Starbucks locations staged walkouts, including one in Seattle. Baristas demanded a finalized contract. In December, unionized baristas launched strikes during the holiday shopping season, including at the Roastery in Seattle.

Niccol was asked during the meeting when Starbucks would finalize a contract with the union. He handed the question off to the company’s chief partner officer, Sara Kelly.

Kelly said the company and the union were committed to working with a mediator, and that the two parties have been at the table for nine months “making great progress.” She did not say when she expects a contract to be inked.

“That mediator is supporting us as we look to really negotiate a foundational framework that will serve for single-store contracts,” Kelly said.

In a news release last Tuesday, Michelle Eisen with the Starbucks Workers United union bargaining committee called Starbucks’ most recent offer pitiful.

“We are still without a first contract from a company who can certainly afford to do right by its workers,” said Eisen, a Buffalo, New York-based barista who’s been with Starbucks for 15 years.

Corporate layoffs

In late February, Starbucks laid off 1,100 corporate employees. Hundreds of workers based in the company’s Seattle headquarters were affected.

In the announcement, Niccol called it a necessary change to position Starbucks for success. As part of the company turnaround, Starbucks was “creating smaller, more nimble teams,” he said in a letter to employees. The layoffs and elimination of hundreds of open roles were meant to target redundancy.

Niccol expanded on the rationale for the layoffs on Wednesday when asked. He said the company was focused on accountability and efficiency.

“I think it’s really important the corporate structure is set up to first and foremost serve the store, support the customer experience and support the partner experience,” Niccol said. “This was all about simplifying some complexity, getting clarity of who’s responsible for what.”

Layoffs weren’t the only part of Niccol’s corporate restructuring. The company is ratcheting up its in-person policy. Employees are only required to be in the office three days per week, but future roles will be based in Seattle or Toronto, signaling a departure from remote status options.

The company is also revoking remote status permission for executives at the vice president level and above.

Corporate aircraft

Niccol is based in Newport Beach, California. In Starbucks’ offer letter to him, the company said he wouldn’t be forced to move to the Seattle headquarters and would have use of the corporate jet for his travel to Seattle, other office locations and stores, according to an August regulatory filing. He’s also eligible for up to $250,000 worth of personal travel per year on the company’s aircraft.

In response to a question about his work and travel arrangements and any environment impacts, Niccol defended his use of the jet.

“Obviously Starbucks serves customers in over 88 markets,” he said. “The CEO, in this case myself, needs to be where the business needs to be.”

Starbucks’ chief legal officer, Brad Lerman, said the company is focused on mitigating any environmental impact from Niccol’s travel. He said Starbucks purchases low-emission fuel and aircraft that are more efficient.

“These are things that the board looks at, that management looks at carefully, and it’s carefully governed,” Lerman said.

Last year, Niccol incurred $72,398 in expenses related to his use of Starbucks’ aircraft traveling between Newport Beach and Seattle, according to a Jan. 24 regulatory filing. Another $19,367 in expenses were related to his personal use of the jet.