Liberal Starbucks to Close 150 Stores After Wage Hikes

Starbucks last week announced that it would be shutting down 150 stores in “densely penetrated markets.” Starbucks generally closes about 50 underperforming stores each year. 

The announcement came after a measly 1% growth performance during Q2, the worst in nine years. Starbucks stock dropped 3.5% Tuesday after the company told investors to expect similar growth in Q3.

The slow growth during Q2 was partly attributed to Starbucks’ decision to close 8,000 stores on May 29th to offer employees “anti-bias training” after the incident in Philadelphia. The training cost the company “tens of millions” of dollars, said former CEO Howard Shultz. 

Current CEO Kevin Johnson, who assumed leadership of the company last April, admitted the closures were also an attempt to blunt the effects of minimum wage hikes and other business regulations that are making stores unprofitable. 

“Our growth has slowed a bit,” admitted Johnson. “I expect better, I think our shareholders deserve better, and we’re committed to address that.”

Most of the closing stores are located in “major metro areas where increases in wage and occupancy and other regulatory requirements” are making the stores unprofitable, continued Johnson. “Now, in a lot of ways, it’s middle America and the South that presents an opportunity.” 

Starbucks, as one of the first corporations to align itself with certain social and political viewpoints, has a reputation among businesses as a “social justice warrior.” 

Starbucks is famous for supporting the LGBTQ community and for its “progressive” employee benefits, such as free ASU classes, health insurance, stock options, and all the free coffee you can drink. These benefits are available to full- and part-time employees. 

In terms of politics, Starbucks is about as liberal as it gets – which is why the announcement is so ironic. 

Minimum wage hikes are a liberal idea; something you’d expect Starbucks to support. But now that states like Washington and Maine have increased the minimum wage to $11 and $9, respectively, Starbucks is jumping ship and running to areas with lower wages and friendlier business regulations.