Big chains open and close stores all the time as a matter of course. But recent moves by Starbucks and Chipotle to close US stores in the wake of employee organizing efforts are drawing allegations from workers and labor advocates that the companies are engaging in union-busting.
Starbucks announced last week it was closing 16 US stores over concerns about crime and other community safety issues, including two stores that are unionized and one that had scheduled a union election. The company also closed a unionized store in Ithaca, New York, in June, citing concerns about the store’s faulty grease trap as well as problems with staffing.
Howard Schultz, the coffee chain’s CEO, added in a video posted to Twitter last week that the company will be shuttering more stores over safety issues going forward: “This is just the beginning. There are going to be many more.” Starbucks has not yet replied to Quartz’s request for comment.
Chipotle, meanwhile, said this week it’s closing a store in Augusta, Maine, that had recently announced plans to hold a union election—the first of the chain’s restaurants to attempt to organize. Chipotle attributed the decision to chronic under-staffing. The company “went to extraordinary lengths trying to staff the restaurant” and ultimately could not justify keeping it open, Laurie Schalow, Chipotle’s chief corporate affairs officer, said in a statement.
Starbucks and Chipotle workers affected by the closures have filed unfair labor practice charges with the National Labor Relations Board, arguing that the closures are both retaliation for organizing and an attempt to discourage employees at other locations from unionizing.
Labor history suggests there’s good reason to wonder whether companies have ulterior motives when they decide to close stores during or after organizing drives.
Store closures send a clear message to workers: “If we become involved in a union campaign, that could give the company an excuse [to shut us down], because it can find a reason to close almost any store,” says John Logan, a professor and labor historian at San Francisco State University.
Why the Starbucks and Chipotle store closures matter
Starbucks has about 9,000 locations in the US, and in its most recent fiscal year, the chain closed 424 stores and opened 449 new ones. But this recent wave of closures is different, according to Logan.
“This is in the context of a nationwide organizing campaign for Starbucks. It’s already alleged to have committed hundreds of unfair labor practices,” Logan says, referring to a recent complaint issued by the National Labor Relations Board that accused Starbucks of illegal actions including firing organizers and intimidating workers from voting in favor of a union.
About 190 Starbucks stores have unionized since workers at a Buffalo, New York, location became the first US store to form a union in December 2021.
Similar concerns apply to Chipotle, which closed 10 stores in the US during the first half of 2021 and just one store in the nine months leading up to March 31, 2022. “It strains credulity to believe that the only store that they’re closing for business reasons is the first store that has petitioned for a union election,” Logan says.
Is it legal for companies to close unionized stores?
In choosing to close stores where organizing activity has taken place, Starbucks and Chipotle could be found to run afoul of the law. Under the 1965 Supreme Court case Textile Workers Union vs. Darlington Manufacturing, it is legal for companies to close their entire business even if doing so is a response to union activity. However, companies cannot legally shut down part of their business (such as a chain closing individual stores) “if the purpose is to discourage unionism in any of the employer’s remaining plants and if the employer may reasonably have foreseen such effect,” according to the court’s decision.
Even if Starbucks and Chipotle are eventually found to have committed unfair labor practices by closing stores, the legal and financial repercussions for the companies will be comparatively light.
“The nature of our labor law now, it actually makes financial sense for companies to break the union law, stifle the drive, and be found guilty,” says Joe McCartin, a history professor at Georgetown University and the co-author of Labor in America: A History. “The most they have to do is pay these employees back wages minus whatever they’ve earned in the intervening time” if the employees got other jobs after the stores closed. “That’s hardly much of a penalty.”
It’s also expected that the NLRB, which is understaffed and has a large case backlog, will take a while to process the complaints. So companies looking to discourage union activity by closing stores may calculate that they can achieve the desired effect well before they get in trouble, if they do at all.
“It’s almost irrelevant to Starbucks whether or not the board were to rule against it, if it closes the stores and disrupts the momentum of the union campaign,” says Logan. “And it almost certainly has had that impact already, and will have that impact by the time these cases work their way through the court’s processes.”
A brief history of store closures as an anti-union tactic
Companies have responded to organizing by closing stores or branches dating back to the early 20th century, when textile mill owners would shut down unionized mills in New England and relocate to North Carolina, according to McCartin. Closing stores as a union-busting tactic became more common in the 1970s, as the US went through a wave of deindustrialization.
“Workers came to believe that if they did organize, especially in industrial plants, that the chance was very high the employer would close up, and that became a big discouraging factor for unions,” McCartin says. “Between 1970 to 1980, you could see the sea change happening in the willingness of workers to take the risk of organizing.”
Walmart is a prime example of a company that’s repeatedly shut down stores and departments in the US and Canada following union activity, Logan points out. In 2000, a Walmart meat department in Texas voted to unionize. Almost immediately, Walmart decided to start selling pre-packaged meat nationwide, and closed all of its meat departments.
After a Walmart store in Quebec unionized in 2004, Walmart closed it in 2005, saying the store was unprofitable. Canada’s Supreme Court later ruled that the shutdown was illegal because it took place after the workers had voted to organize, during a “freeze period” in which the company was legally obligated to bargain with the union.
More recently, after a Walmart store in Pico Rivera, California unionized in 2015, Walmart laid off workers and shuttered the store for months, attributing the decision to plumbing issues.
Even if companies don’t actually close stores, simply insinuating that they may do so can be enough to discourage workers from organizing. Schultz’s recent comments about plans to close more stores in the future may help Starbucks “create the idea of a scarcity consciousness among workers,” says McCartin. “So even if it’s not direct retaliation, it does help the company sow fear and doubt.”
Will closing stores quash union activity?
The reason closing stores is so effective as a union-busting tactic is that workers generally want to keep their jobs. If they can be convinced that they have to choose between unionizing and their livelihoods, many will decide to give up the union fight.
But McCartin says the calculation may be different for the young workers powering the Starbucks organizing campaign and other big service-industry union drives, who seem “willing to take more risks than blue-collar workers in the 1970s.”
Back in the 1970s, he points out, a manufacturing job was the ticket to a secure middle-class life. “If it had wages and benefits that couldn’t be matched, people were reluctant to take a risk,” McCartin says. “I’m not sure that’s true for these workers.”
Between student debt, higher housing costs, and rising but frequently still inadequate wages, today’s young people are less likely than older generations once were to feel they have a path to financial security. That also means they have less to lose by unionizing. And the new labor movement’s David-and-Goliath ethos is highly compatible with a broader post-pandemic cultural shift in which many young people are rethinking what they’re willing to sacrifice for the sake of their jobs and demanding more from their employers.
That’s not to dismiss the scale of the challenges that the workers behind burgeoning union efforts are up against. But perhaps corporations will find that familiar scare tactics aren’t so scary for workers anymore.