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Starbucks (SBUX+8.64%) has the money to tackle its staffing issues, according to William Blair analyst Sharon Zackfia. By investing in incremental labor, the coffee giant could improve its service and speed in stores.
“Adding more labor to stores is the first step towards repairing some of these issues,” she told Quartz. That could alleviate pressure on existing employees, but Starbucks will also need to develop long-term strategies to make labor more efficient.
In an email to Quartz, Starbucks said it has already made strides in this area, noting that its turnover rate is at its lowest since the pandemic.
Feedback from workers “shows consistent improvement in key areas of the Starbucks [staff] experience, which remains a priority for us as a company,” a Starbucks spokesperson said.
However, employees have voiced concerns about ongoing staffing shortages. Some say they have to handle operations with “skeleton” crews, according to Bloomberg, which cites an internal survey.
Starbucks has also faced unionization challenges from workers advocating for better pay and working conditions. The movement has sparked discussions about how the chain can maintain its brand affinity and address workforce concerns. In September, CEO Brian Niccol said in a letter that the chain is committed to bargaining in “good faith” with the union representing many of its baristas. Starbucks has notched more than a dozen labor law violations in recent years, but the company also recently saw the upside of a Supreme Court ruling to limit the enforcement power of the National Labor Relations Board.
Around that time, Niccol – known for turning Chipotle into a powerhouse and Taco Bell into a fast food juggernaut – said he planned to get Starbucks back to its roots by focusing on four main areas: supporting baristas, improving delivery, fixing the in-store experience, and promoting the Starbucks ethos of good coffee.
Zackfia argues that with the right staffing approach, Starbucks can leverage its strong brand to attract talent and retain employees. However, this is likely to be a challenge, as each store has unique staffing needs that require balancing workers’ expectations and operational realities. She noted that the chain needs to cool it on coffee innovations, and focus on making items customers want, like Refreshers and Pearls.
There’s also a critical need to allow baristas time to connect with customers. The pressures of digital orders, in-store service, and drive-thru operations can make it harder for employees to create meaningful interactions, further complicating the chain’s message of being a communal “third place.”
“There’s certainly potential to make labor more efficient,” Zackfia said. “Figuring out operations is almost key to everything else working.”