Starbucks is giving hundreds of thousands of employees a financial stake in its turnaround, rolling out stock grants, performance bonuses, and expanded tipping opportunities as its Back to Starbucks strategy gains traction.
The coffee giant announced Thursday that nearly 200,000 full- and part-time employees worldwide received new Bean Stock grants on Wednesday. Another 130,000 employees have stock grants from previous years vesting this month, continuing a program that has provided more than $2.75 billion in pretax gains since its introduction in 1991.
More than 80 percent of eligible hourly employees in North America will receive their first payout Friday through the new Best of Starbucks Reward program. Announced earlier this spring, the initiative allows eligible baristas and shift supervisors to earn up to $300 each quarter when their coffeehouses meet or exceed certain sales, operational, and customer service metrics.
Starbucks has also seen a substantial increase in customer tipping since expanding its digital tipping options in July. Customers have contributed more than $22 million in additional tips through the new channels, more than doubling tipping activity.
Chief partner officer Sara Kelly and COO Mike Grams outlined the investments in a company blog post Thursday.
“We have strong momentum in our Back to Starbucks plan, and coffeehouse partners are at the heart of that progress,” Kelly and Grams wrote. “Every day, they bring the Starbucks experience to life through their craft, the connections they create with customers, and the way they support one another.”
The investments follow a strong fiscal fourth quarter for Starbucks, which reported its third consecutive quarter of U.S. same-store sales growth exceeding 7 percent. Domestic comps rose 7.7 percent, driven by a 2.4 percent increase in traffic and a 5.2 percent increase in average ticket. Global same-store sales climbed 7.2 percent, marking the company’s fifth consecutive quarter of worldwide growth.
The stock grants continue a tradition that dates back 35 years, when Starbucks operated approximately 100 locations. The company became the first major retailer to offer stock grants to eligible full- and part-time hourly employees. Since the program began, more than 2 million employees have benefited from Bean Stock.
Starbucks is also investing in staffing, scheduling, and its Green Apron Service initiative to improve daily operations. The company reported that hourly employee turnover is nearly half the industry average, and nearly 95 percent of employees receive their preferred schedules. More than 3 million people applied for jobs with Starbucks in North America last year.
The chain is also maintaining its commitment to fill 90 percent of retail supervisory and managerial positions through internal promotions, creating advancement opportunities for existing employees.
Other benefits available to eligible workers include comprehensive health coverage, full upfront tuition coverage for a first bachelor’s degree, and up to 18 weeks of paid parental leave. A recent study by Aon found that Starbucks offered more valuable benefits to hourly retail employees than any of the more than 60 U.S. companies examined.
The compensation changes also consider unionized shops. Starbucks said the Best of Starbucks Reward, weekly pay, and expanded tipping options are subject to collective bargaining at the approximately 5 percent of its U.S. locations with union representation, as required by federal law.
“When partners thrive, Starbucks thrives,” Kelly and Grams wrote.
