starbucks ethics case study

The CEO of Starbucks and the Practice of Ethical Leadership

• Markkula Center for Applied Ethics
• Focus Areas
• Leadership Ethics
• Leadership Ethics Resources

Case study explores Kevin Johnson's response to an incident where two African Americans were asked to leave a Philadelphia Starbucks.

Starbucks CEO Kevin Johnson (AP Photo/Richard Drew)

One year after becoming CEO of Starbucks, Kevin Johnson faced a leadership test when two black men were arrested in a Philadelphia Starbucks.  The men were waiting to meet a business associate, but they didn’t purchase anything while they were waiting. The store manager asked them to leave, and they refused, explaining that they were there to meet someone. The manager called the police because the men refused to leave, and the police arrested them.

Another patron at Starbucks recorded the arrest on her cell phone, and it quickly went viral. In an interview after the arrest, the woman who took the video mentions that she had been sitting there for a while, and she wasn’t asked to leave even though she didn’t order anything.  Additionally, the video shows the business associate of the black men show up during the arrest, and he asks the manager and the police what the men had done wrong. The general public and those who witnessed the arrest labeled it as discriminatory and racist.

This happened on a Thursday and the following Monday, Johnson said that the manager no longer worked at the store.  The arrests led to protests and sit ins at the Philadelphia Starbucks the days following the event.

In his apology statement and follow up video release shortly after the arrests, Johnson said, “ The video shot by customers is very hard to watch and the actions in it are not representative of our Starbucks Mission and Values.  Creating an environment that is both safe and welcoming for everyone is paramount for every store.  Regretfully, our practices and training led to a bad outcome—the basis for the call to the Philadelphia police department was wrong.”  

Before the incident, Starbucks had no companywide policy about asking customers to leave, and the decision was left to the discretion of each store manager. Because of this flexible policy, Starbucks had become a community hub--a place where anyone could sit without being required to spend money. Johnson mentioned this community in his apology when he said Starbucks works to create an environment that is “both safe and welcoming for everyone.”

Also in his apology, Johnson outlined the investigation he and the company would undertake. The apology detailed actionable steps Starbucks leadership would follow to learn from the situation, including meeting with community stakeholders to learn what they could have done better.  Johnson took full responsibility for the actions of his employees, and he acknowledged that Starbucks customers were hurt by the arrests. Johnson acknowledged that employees needed more training, including about when to call authorities, and that the company needed to conduct a thorough analysis of the practices that lead to this incident.

After issuing his apology, Johnson went to Philadelphia and met with the two men face to face to involve them in dialogue on what Starbucks needed to do differently.

The week following the arrests, Starbucks announced it would temporarily close 8,000 stores to conduct unconscious bias training, which they did on May 29, 2018.  A month after the arrests, Starbucks released a new “ Use of Third Place Policy, ” which states that anyone can use Starbucks and its facilities without making a purchase; it also explains what managers should do if a customer becomes disruptive.  Additionally, the policy says that Starbucks seeks to create “a culture of warmth and belonging where everyone is welcome. This policy is intended to help maintain the third place environment in alignment with our mission ‘to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.’”

Practice of Ethical Leadership

Ann Skeet, senior director of Leadership Ethics at the Markkula Center for Applied Ethics, has created a Practice of Ethical Leadership .  Using this model, we can ask the overall question:   How is Johnson practicing ethical leadership? Additionally, we can consider what we learn about his character through his actions and his impact.

Along with character as a cornerstone for anyone’s practice of ethical leadership, we can look at the five additional ethical leadership practices Skeet identifies as a way to explore whether Johnson’s actions are enhancing his impact as an ethical leader in his role as Starbucks CEO.

• Creating Community :  Did Johnson use Starbucks’ shared values as the cornerstone of his decision making after the arrests?  Did his decision to close all Starbucks stores for unconscious bias training and to create a new “Third Space Policy” align with Starbucks’ mission and goals?  Did his handling of the incident promote positive relationships between employees and customers? Did it encourage a sense of connectedness and shared values?
• Encouraging Ethical Conduct :  Did Johnson openly acknowledge that his decision was based in ethics and morality?  Did his apology and actions promote awareness of an ethical issue? Did it create a positive or negative difference in the communities Starbucks serves? Did it make a positive or negative difference for Starbucks employees and customers?
• Showing Discipline in One’s Role :  Does Johnson explicitly accept responsibility for the incident and provide direction for a course correction? Does he identify ways to collaborate with others when necessary?  Does he show he understands what his role is in fixing this problem?  
• Clarifying Culture :  Did Johnson clarify his values and the company’s values in his apology and with his subsequent actions?  Did Johnson’s apology and follow-up actions uphold Starbucks’ mission and core values? Did he identify gaps between stated and actual values?  Did Johnson’s apology help Starbucks employees figure out if their personal values align with the company’s?
• Designing Ethical Systems :  Did Johnson’s actions have impact beyond Starbucks?  Did they sent a precedent for other companies to follow? Did his apology create a conversation about unconscious bias in the workplace? How do his apology and the subsequent follow-up actions compare to other companies and CEOs that have faced similar problems?

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Case Study of Crisis and an Affirmation of Character

The History of Starbucks Coffee Company's Anti-Bias Efforts

This is a story of a business that has always tried to be a different kind of company. It’s a story of an incident of racial bias in one of the brand’s stores—and how that moment galvanized a national effort to confront racial bias, and reaffirm an intention to ensure all Starbucks stores are places that are welcoming of all. It’s told through a diverse set of voices: the Starbucks leaders and team members, critical advisors, and design partners who led the efforts over an 18-month period.

Where Does This Story Start?

A bold move fueled by critics, believers and partners, a massive design effort, color brave, not color blind, shared experiences are the motivation and common language, whole-human design: the only hope, realization #1: the role of starbucks as a welcoming ‘third place’ needed a serious examination. , realization #2: leaders are learners, too., realization #3: building a sense of goodwill would be vital—we had to create a safe space., realization #4: representation has to become our modus operandi., realization #5: when given the chance, humans rise to their best selves., may 29: a day of conversation, personal reflection and peace.

WE’LL SEE YOU TOMORROW At Starbucks we are proud to be a third place—a place between home and work where everyone is welcome. A place where everyone feels they belong. Today, our store team is reconnecting with our mission and with each other. We are sharing our ideas about how to make Starbucks even more welcoming.  We look forward to seeing you when we reopen at ___________.

Multimedia Training to Guide the Groups

The making of a much-deeper curricula.

• Creating an Inclusive Environment with Sinéad Burke
• Be a Community Builder with Cleo Wade
• Leaning into Discomfort with LB Hannahs
• Courageous Leadership with Brené Brown
• Mindful Decision Making with Mel Robbins
• Sharing your Story with Shonda Rhimes
• Conversations on Mental Health with Esme Weijun Wang

An Open Source Approach

The 2019 Leadership Experience

Partner feedback has been decidedly positive.

• Assess any given situation, 
• Consider the implications and possible outcomes, and 
• Take action to maintain their third-place environment. 

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How Starbucks’s Culture Brings Its Strategy to Life

• Paul Leinwand
• Varya Davidson

They focus on a few positive attributes and amplify them.

In most organizations, culture and strategy tend to be discussed in separate conversations. Executives know that culture is important and that a negative culture can hurt company performance, but they often don’t know what to do about it. Or they attempt to improve the situation by launching a culture initiative to “make the workplace more positive.” What most executive teams typically fail to do is to connect the company’s culture with how the company makes its strategy work.

• Paul Leinwand is a principal at PwC U.S., a global managing director at Strategy&, and an adjunct professor at Northwestern’s Kellogg School. He is a coauthor, with Mahadeva Matt Mani, of Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future (HBR Press, 2022).
• Varya Davidson leads the people and organization business for Strategy& in Australia, Southeast Asia, and New Zealand and sits on the Katzenbach Center’s global leadership team. She is a partner with PwC Australia, and has worked with leading public and private sector organizations across Europe, the Middle East, North and South America and Asia-Pacific.

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Starbucks Corporation: Fighting Racial Bias

By: Arpita Agnihotri, Saurabh Bhattacharya

In April 2018, two black customers were arrested at a Starbucks Corporation (Starbucks) outlet in Philadelphia, Pennsylvania, after one of the two men asked to use the restroom while the pair were…

• Length: 8 page(s)
• Publication Date: Jan 13, 2020
• Discipline: General Management
• Product #: W20005-PDF-ENG

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In April 2018, two black customers were arrested at a Starbucks Corporation (Starbucks) outlet in Philadelphia, Pennsylvania, after one of the two men asked to use the restroom while the pair were waiting to meet someone. After a video of the arrest went viral on social media, Kevin Johnson, the chief executive officer of Starbucks, immediately apologized to the men and, further, announced that the company would hold racial bias training across all Starbucks stores in the United States. Johnson was criticized for the presumption that a half-day training session could possibly resolve racial bias issues. Employees also expressed their dissatisfaction with the training program. Johnson also announced an open-toilets policy, which was also criticized, raising several questions: Had Johnson managed the crisis appropriately? How could he make such training effective? Should Johnson change his open-toilets policy? Should he reconsider his decision to conduct such training at the cost of future revenues?

Arpita Agnihotri is affiliated with Pennsylvania State University - Harrisburg. Saurabh Bhattacharya is affiliated with Newcastle University.

Learning Objectives

This case is intended for both undergraduate- and graduate-level courses on business ethics and corporate governance. After working through the case and assignment questions, students will be able to do the following: Explain how to respond to a racial bias crisis situation. Analyze the effectiveness of racial bias training. Describe different types of implicit bias that may occur in addition to racial bias. Critically analyze whether customer-pleasing policies such as open-toilets policies are good for an organization's reputation. Describe different routes or strategies organizations can use to enhance diversity.

Jan 13, 2020

Discipline:

General Management

Geographies:

United States

Industries:

Accommodations

Ivey Publishing

W20005-PDF-ENG

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Starbucks Reinvented

Harvard Business School Professor and historian Nancy Koehn has studied Starbucks and its leader, Howard Schultz, for close to 20 years. For her, the company represents much more than a phenomenal success story.

In a recently published case, "Starbucks Coffee Company: Transformation and Renewal," (available soon) Koehn and coauthors Kelly McNamara, Nora Khan, and Elizabeth Legris trace the dramatic arc of the company's past seven-plus years—a period that saw Starbucks teeter on the brink of insolvency, dig deep to renew its sense of purpose and direction, and launch itself in new, untested arenas that define the company as it exists today.

"This case distills 20 years of my thinking about the most important lessons of strategy, leadership, and managing in turbulence in the frame of a very relevant company," says Koehn, the James E. Robison Professor of Business Administration. "As a brand, leadership, and entrepreneurship scholar, I've been dogging Starbucks for a long time."

On a 1995 trip to Seattle, Koehn visited a Starbucks store for the first time and was struck by what she saw and felt. The notion of a "third place" between home and work to relax and enjoy the small, affordable luxury of a special coffee beverage seemed to resonate with the social and economic moment, she recalls. Six months later she met Howard Schultz, an entrepreneur who acquired the company in 1987, and was struck by his seriousness of purpose and the breadth of what he wanted to accomplish.

The case, Koehn's fourth to focus on Starbucks, opens in February 2007. Schultz, no longer Starbucks' CEO but still its chairman, is worried the company is losing its ability to be true to its values while providing a store experience that conveys a sense of comfort, connection, and respect for its product and the communities Starbucks serves.

So Schultz composed a heartfelt, searching memo to senior leadership. In it, he bemoaned decisions (for which he accepted responsibility) that improved efficiency and increased economies of scale but robbed stores of some of their essential magic, such as the smell of roasting coffee and the sights and sounds of traditional Italian espresso machines and baristas at work.

He also cited the company's rapid expansion and the potential "commoditization" of the Starbucks brand. "[W]e desperately need to look into the mirror and realize it's time to get back to the core and make the changes necessary to evoke the heritage, the tradition, and the passion that we all have for the true Starbucks Experience," Schultz wrote.

The scope and richness of Koehn's case gives it the feel of a page-turning novel; in that sense, Schultz's memo is the inciting action for all that follows.

Remaining True To Core Values

The challenge that had confronted Starbucks in the early- and mid-2000s was one common to many organizations: Could the company continue to grow while preserving its culture and values? In some areas, the drive to expand, egged on by Wall Street, was compromising the company's ability to invest in its partners (Starbucks' term for its employees), deliver personalized customer service, and maintain a close connection to the local community.

In addition, McDonald's and Dunkin' Donuts had emerged as serious competitors, offering their own lines of specialty coffee beverages. Even so, Starbucks' financials for 2007, the year Schultz composed his memo, didn't look so bad. But the entrepreneur became concerned as he dug more deeply into the numbers. Sure, revenues were up almost 21 percent over the previous year, but had slowed by over a third; transactions per store were up 1 percent, versus 5 percent the year before. Same-store sales rose only 5 percent, the smallest increase in five years.

In January 2008, Schultz returned as Starbucks CEO, replacing Jim Donald, the man he and other senior colleagues had chosen to lead the company.

Starbucks Sails Again

The case chronicles the blizzard of decisions and initiatives that follow what could have been the company's death knell as the financial crisis hit home and consumers cinched their belts.

"Schultz understood that you can't lift your foot off the gas pedal when you're attempting to transform a company," Koehn says. "Severe as its financial needs may be, you also have to figure out what you will invest in. Schultz knew that if he waited until the company was out of the woods to invest in new products, communication channels, and ways of doing business it would be too late—Starbucks would no longer be relevant."

From the start, Schultz sent the clear, unwavering message that Starbucks' transformation would represent a return to its roots and an uncompromising commitment to core values, such as health care benefits for any partners working at least 20 hours a week.

At a March 2008 gathering of 200 senior-level company leaders, Schultz unveiled a Transformation Agenda that included seven "Big Moves":

• Be the undisputed coffee authority;
• Engage and inspire our partners;
• Ignite the emotional attachment with our customers;
• Expand our global presence—while making each store the heart of a local neighborhood;
• Be a leader in ethical sourcing and environmental impact;
• Creative innovation growth platforms worthy of our coffee;
• Deliver a sustainable economic model.

The case provides a behind-the-scenes look at how the coffee company moved forward on these goals, including the introduction of the milder Pike Place Roast; the story of its VIA Ready Brew line; the launch of a loyalty program; investment in and engagement with social media; focus on a global expansion strategy; and the extension of social programs. The company closed stores, restructured its manufacturing and supply operations, and, perhaps most significantly, took steps to reengage its partners and store managers. In February 2008, Starbucks closed more than 7,000 of its stores across the country for "Espresso Excellence Training," taking the time to work with approximately 135,000 baristas to ensure they could pour a perfect espresso shot and steam milk properly.

For Schultz, however, that wasn't enough—he wanted to reach the company's store managers, recognizing them as essential to the transformation process.

"I needed an unfiltered venue for expressing my empathy about all that we were asking our partners to do and telling them plainly what was at stake," he wrote in Onward: How Starbucks Fought for Its Life without Losing Its Soul . The answer, in Schultz's mind, was a three-day conference in New Orleans in October 2008, a moment when the global economy happened to be tanking. Starbucks' fourth quarter profits were down 97 percent from the same time a year earlier; for the fiscal year, net earnings were down 53 percent to $316 million. The Starbucks board was reluctant to send 10,000 partners to New Orleans at a cost of $30 million, but Schultz stuck to his guns.

In addition to rolling up their sleeves and taking part in community service projects to aid areas of the city still recovering from Hurricane Katrina, partners participated in team-building events that reviewed the company's guiding principles and reminded them of their central role in the customer experience. Schultz also brought in Bono, lead singer of U2, to announce a partnership to channel proceeds from holiday beverage sales to the Global Fund in support of AIDS relief programs in Africa.

The New Orleans conference was a turning point for Starbucks; in the "novel" of Koehn's case, it's the climax.

"Investing in a conference of that size is such an unusual thing to do when faced with a cash crunch," Koehn says. "Schultz understood that what saves and breaks businesses is much more than cash. In the midst of so much turbulence, it's all too easy to pull levers on the low-hanging fruit of cash and logistics. But you don't save a business and turn it around without speaking to, focusing, and calling on the spirit of your people."

Schultz's experience qualifies him for closer study in Koehn's HBS course Power and Glory in Turbulent Times: The History of Leadership from Henry V to Steve Jobs. Not all managers are confronted in their careers with the sort of transformation challenge faced by Starbucks, but Schultz's reflections and actions are instructive for anyone charged with finding sources of strength, innovation, and renewal in today's turbulent business environment, Koehn says.

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Starbucks Business Ethics Case Study

Business ethics at starbucks corporation: a case study.

The importance of ethics has been highlighted time and again in the context of business. In the twenty first century government and a number of watchdog agencies have been keeping a keen eye on businesses that try to engage in unethical practices.

While large businesses mostly act responsibly, sometime they too may feel inclined to indulge in unethical practices just for the sake of profits.  From Nike to Walmart, all have faced fierce criticism in the past for unethical practices.

From supply chain to HR management and in other areas too including marketing, there is a need for businesses both small and large to follow ethical practices. However, in this crowd of brands, some of the companies stand out for their ethical image.

Starbucks is also one of them. It has always adhered to ethical practices and except a few petty issues has generally been hailed as a highly ethical and customer centric company.  Ethics is an important focus area at Starbucks. It has helped the company acquire the image of a highly responsible coffee brand that deals with its customers, suppliers and employees ethically.

Today, Starbucks is the largest coffeehouse chain of the world with the highest number of stores running worldwide. Its total number of stores as of 2017 was 27,339. Despite having grown as large, its focus on ethics has not reduced.

Ethics in the supply chain:

Starbucks focuses on ethics in every area but particularly down the supply chain. In this area its focus on doing business ethically is very strong. What is it like being ethical with your suppliers? There are a few important principles related to ethicality in the supply chain.

Supply chain and supplier relationships must not remain limited to just a formal give and take relationship. The best brands that believe in being ethical form strong and trustful relationships with suppliers. Some important principles that businesses must follow are as follows:

• Treat your suppliers equally whether big or small. Equality is an important principle that businesses must follow in their supply chain. Whether it is a major supplier or a small one, it is your responsibility to treat them equally and not to discriminate against them. While this creates trust, it also minimizes issues which could otherwise create difficulties. Treating them equally inspires trust and confidence and helps establish long term relationships.
• Empower your suppliers. As already mentioned, it is not just a  give and take relationship and you must focus on creating an environment of empowerment for your suppliers. Empowering your suppliers can be highly advantageous for your brand. It makes them feel connected and strengthens your relationship with them.
• Train and educate your suppliers.  Good businesses do not just care for themselves but they care for others too. They care for their suppliers and provide them the necessary training in various areas to protect and support them. From labor to law and CSR, there are several areas where your suppliers may require training and where training them may make them more productive and efficient. This will have a double benefit for you.

Starbucks  has followed all the above mentioned principles responsibly down its supply chain. It believes in helping the farmers it sources from and giving back to them by empowering them. Its success is linked to the success of the farmers who  grow cocoa for it. In the process of sourcing, the brand focuses on both ethics and sustainability. Helping these farmers grow and thrive helps ensure sustainable supply of high quality raw material in the longer term. The Arabica coffee that Starbucks sources is different from the regular Arabica.

It is found at the high altitude and Starbucks picks the beans when they are at their best. However, the farmers who grow them also deserve to be rewarded amply for their endeavour. Starbucks has formed a meaningful relationship with these farmers which is more than just a regular buy and sell relationship. Instead of using middle men who would seek their own profits, it contacts farmers directly and seeks to improve their lives by helping them be more self dependent.

In several coffee communities around  the world, this company has helped at least 1 million cocoa farmers. Traditionally, what used to happen is that most of these farmers would not get the right prices of their produce. Middlemen mostly took away the profit. To change this norm and to help the farmers who grew cocoa, Starbucks created its own team to source directly from the farmers.

There is more about ethical sourcing at Starbucks. The farmers are also required to adhere to certain rules and remain committed to Starbucks policy of corporate citizenship. In the twenty first century, the larger businesses have seen the level of scrutiny against them rising. Criticism and accusations have led to companies from Nike to Walmart all implementing social responsibility programs. Starbucks too has not remained absolutely free from accusations.

Elliot Schrage, in a 2004 article for HBR notes that when the anti globalization activists singled out Starbucks for trying to exploit the third world farmers, Starbucks took it as a challenge to its reputation and image. It launched a pilot programme that was going to change its relationships with the farmer forever. This programme came to be known as sustainable sourcing. As a part of this programme the brand started cultivating strong relationships with farmers (suppliers) that were environmentally and socially responsible. It created rewards to motivate such suppliers. This strategy controlled the criticism against Starbucks and as a result the company made it a cornerstone of its global business and supply  chain strategy.

Starbucks had launched its preferred supplier program in 2001 which was intended to attract and reward the socially and environmentally responsible farmers. The company had set aggressive growth plan and these suppliers were a very important pillar of its growth plan. It needed suppliers who took the best care of their employees and lands. They were the most responsible farmers and suited the company’s growth strategy. Farmers had to apply to the program to become a preferred supplier. The company reviewers evaluated these suppliers on ‘twenty metrices’ to determine if they engaged in sustainable and environmentally responsible farming. The kind of land on which  quality cocoa beans can be grown is not found in plenty and to retain the productivity of such lands, it is essential that the farmers do farming in a environmentally responsible and sustainable manner. The reviewers also ensure that the farmers are engaged in socially responsible practices such as have a good social image and take care of their labor force well. This ensures that  the supply is not compromised due to labor or legal unrest. Starbucks rewards points on each criteria and the farmers earning the highest points are awarded higher prices for their produce.

Starbucks has a very carefully planned supply chain strategy that is based on ethical sourcing and supply. The brand has set ambitious targets in terms of sustainable and ethical sourcing and has also achieved these plans to a very large extent. In 2017, the brand celebrated 99% ethical sourcing. By 2020, it plans to source 100% of its coffee ethically from its suppliers around the world. At the time, the brand had started its ethical sourcing plan, it was unsure if its gamble was going to be successful in the long term. However, it has been more than 15 years now and the brand has seen a lot of success in these years. It is clear that  its gamble has paid off. A refreshing cup of coffee sourced sustainably from the best farms is just a sign that Starbucks cannot compromise on quality. In 2017, when its Japan and Europe based stores celebrated 99% ethical sourcing, the brand had proved that it could achieve its target ethically. What Starbucks is doing is actually good for the health of the brand, its suppliers as well as the customers and the environment. Managing 100% ethical practices down your supply chain is a major challenge before any big business. However, very few are able to do it as proactively and creatively as Starbucks.

Ethical Human Resource Management:

Human resource management is now a central area of business in the twenty first century that  affects the productivity and efficiency of businesses. The larger businesses are especially very careful about their hiring and retention strategies and training their employees for maximum productivity. Well trained employees are like an asset and businesses have to care for their well being. Managing human resources ethically is a challenge but also an opportunity in this era. Some of the newly risen technology brands like Google , Salesforce.com and Facebook have performed very well in this area. Starbucks also believes in winning its employees’ trust by managing them ethically. Ethical HR practices result in higher motivation, low attrition as well as performance maximization. Employee satisfaction has become very critical to maximizing your organizational efficiency and productivity in the twenty first century. This century has brought a lot of competition. Even in the area of HR management, brands are in a  race to remain ahead of others and hire and retain only the best. This is the situation in nearly every industry because organizational productivity depends heavily on the efficiency of the human resources.

Starbucks has also focused on managing its Human Resources strategically and smartly as well as ethically.  So, what does Starbucks do to keep its workers satisfied? Does it focus on worker  engagement and motivation? Yes, it does. There are several perks of working at Starbucks apart from a great environment and work culture. It has received several honors and accolades in each of these areas including being one of the most ethical companies in the world, a Military friendly employer, a Military Friendly Spouse employer as well as one of the world’s most appreciated companies according to Forbes. These recognitions show that Starbucks is an attractive employer. So what does being an ethical employer mean for Starbucks? Does it mean paying its employees well and caring for their needs? Or does it mean giving them more than they deserve and helping them realize their dreams? It involves all that apart from creating an environment of trust, inclusion and security.

Starbucks calls its employees partners and does everything required to help them live empowered lives. It believes in sharing its success with its people and has tailored its benefits and perks to suit the needs of its workers. Packages include base pay and bonus, benefits, retirement savings, stocks and perks. Benefits provided by Starbucks to its employees include health coverage, stock and savings, paid time off, parental leave, paid time off, education, commuter benefit and parters assistance. There are several kinds of perks offered to the employees as well that  include coffee and tea mark out,  in-store discount, recognition programs and several more benefits like on site gym, day care and dry cleaning. These perks and benefits are intended to keep the employees happy and satisfied but at the same time they are meant to keep employees engaged and retain them longer. In the 21st century, the companies are competing to keep their employees more satisfied than others. However, to build an environment and culture of trust and ethics is essential to make your employees feel truly empowered and satisfied with their jobs. Starbucks has created a truly inclusive environment in which its employees can collaborate with others and lead satisfied lives. It gives its employees special ethics and compliance training in order to help them do everyday business ethically. As a part of this program, the partners (employees are called partners at Starbucks) are trained to make ethical decisions at work. Employees  receive awareness materials including Standards of business conduct to complete their legal and ethics training. They also have several communication channels through which they can report their issues and concerns.

Ethical Customer Service at Starbucks

Customer relationships are an important area of focus in the twenty first century where businesses mind their customer relationships more than ever. It is because competition has increased manifold and every customer is valuable. Businesses want to retain every customer which is possible only by forming long term and strong relationships with them. Every customer is an aware customer and knows more about your brand already before you tell him. It is why fairness and integrity is important in customer relationships because if you try to be unfair the customers will know. It is why the best brands are always ethical towards their customers and would not treat a single one unfairly. Starbucks is already known as a customer centric company and focuses a lot on customer service and customer relationships. It is well known for its customer service and trains its employees in the area of customer relationships well.

The Mission statement of Starbucks is :

To inspire and nurture the human spirit – one person, one cup, and one neighbourhood at a time.

The focus of its mission statement is also the customer – each individual customer. The reason is clear. Your business revolves around the customer and that is why he exists at the centre of the picture.  In the recent few years, Starbucks has strengthened its focus on customer service and made it a core part of its business strategy. It is not just the employees in the front line but other employees two are provided ample training in this area. Even the baristas who would ordinarily just prepare coffee are trained in customer service at Starbucks so they can interact with customers well and keep them engaged. Customer service is just a part of the entire picture however because when you are concerned with ethics, you have to care for more than just hundred percent  customer satisfaction. Apart from making them feel welcome, you have to make them feel included. To win a customers’ trust and to retain it is a difficult task but you can handle it with responsibility. Customer ethics are infact a matter of responsibility.

Starbucks is a premium brand that charges premium prices of its products. It is not an average brand that  can expect its customers to ignore its minor flaws. Customers expect a  personalized treatment but more than anything they want transparency in relationships. If a brand can manage to be transparent in terms of its customer relationships, it is an ethical brand.  People say that the Starbucks experience is a distinct experience in itself. The reason is that there are those thousands of baristas and other employees bearing the onus of providing the best customer experience on earth. Customer ethics are not a child’s play but you can still manage to be among the best if you try. Starbucks has excelled other food and beverages brand in this area and it has major benefits for the brand as well. When other brands are fighting to create strategies to win and retain customers, it is busy expanding its business to new regions of the world and reaching new customer segments. However, it HR has played a very important role in ensuring that every customer gets only what he expects.  Starbucks is performing well in one other area too which is customer conversations. It has opened several channels for customer conversations and suggestions. Some of the key channels are its own website and the social media. Apart from the customer care number and email, people can also use its website to submit complaints and suggestions. Facebook has also proved an effective medium for Starbucks to communicate with its customers and handles customer complains and issues proactively there.  Customer ethics matter in this era because of their direct relation to your brand image and affect how much your customers love you.

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Starbucks Corporation

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Starbucks is probably the most well known coffee shop in the world. It owns over 36,000 stores in 84 countries. The brand’s iconic logo and the misspelt names on its paper cups are a worldwide phenomenon. It claims it is “committed to the highest standards of quality and service”. But who pays the price for all that? 

How ethical is Starbucks?

Our research highlights several ethical issues with Starbucks, including its approach to Supply Chain Management, Workers’ Rights, Human rights, Political Activities, Anti-Social Finance,Tax Conduct, Palm Oil Sourcing, Factory Farming and Animal Rights.

Below we outline some of these issues. To see the full detailed stories, and Starbucks’ overall ethical rating, please sign in or subscribe .  

Operations in oppressive regimes

The company has operations in countries run by regimes that are known to have poor practices when it comes to human rights including China, Mexico, the Philippines and Turkey. 

Supply Chain Management

Starbucks scores a worst Ethical Consumer rating for its supply chain management.

Starbucks doesn’t pay supply chain workers a living wage. Although it refers to its employees as “partners” , the coffee chain’s social responsibility reporting contains adequate clauses on discrimination, freedom of association and forced labour but its clause on wages is poor as it only calls for minimum wages to be paid rather than a living wage.

Workers’ rights violations in developing countries

Children working as much as 40 hours a week were found by Channel 4’s Dispatches investigations on Guatemalan farms that supplied Starbucks. When confronted, the company says it launched a “full investigation into the claims” and said that it had not purchased coffee from the farms in question during its most recent harvest season.

Labourers from one of the poorest areas of Brazil had their wages slashed illegally by a company that supplies beans to Starbucks. The workers saw their pay cut by nearly a third to cover the cost of the portable coffee harvesters they used, as well as the fuel needed to run the machines. Deductions like this are prohibited under Brazilian law.

Union busting

A number of stories can be found about Starbucks’ attempts to prevent unionisation in its US stores. One article accused Starbucks of intimidating workers ahead of union voting . Another that workers were being sacked when found involved in unionisation efforts . Starbucks denied the accusations and said that the workers violated company safety and security policies by conducting media interviews on the store’s premises without wearing masks.

Tax conduct

Barbados, the Bahamas and the Cayman Islands aren't just holiday destinations, they're also tax havens which Starbucks operates in. The company has been criticised for years for its tax avoidance practices which these tropical islands are often used for.

“Starbucks paid just £5.4m in UK corporation tax last year despite making a gross profit of £95m” claimed the Guardian in a 2022 article. Its global CEO, Kevin Johnson, reportedly earned over £16 million in 2020.

Starbucks spends millions in the US on political donations every year. In 2020, 10% of its donations went to the Republicans and 90% to the Democrats. It is also a member of the Business Roundtable, a lobbying organisation that puts undue pressure on decision makers and has lost a whole mark in our Lobbying category.

Boycott call over deal with Nestlé

Starbucks struck a multi-billion dollar partnership with Nestlé in 2018. In this lucrative deal Nestlé has been selling and distributing Starbucks’ ready-to-go coffee that brought the giant $3 billion in 2020 alone.

The Lakota People's Law Project Action Center is calling for a boycott of Starbucks due to its relationship with Nestle.

It states "coffee empire Starbucks has struck a multibillion dollar deal with Nestle. We ask you to join the movement to #BoycottStarbucks, #BoycottNestle, and boycott all of their products."

It claims that Nestle profits from water theft, habitat destruction, child slavery and plastic pollution, saying the coffee brand should be boycotted because "Nestle and Starbucks have a global marketing alliance, in which Nestle has distribution rights outside Starbucks stores".

Environment

The company appears to have a good understanding of its main environmental impacts. It received our middle rating for Environmental Reporting. In its annual Environmental and Social Impact report it includes meaningful discussions about packaging, recycling, waste, agriculture, water, reforestation and forest conservation, coffee sourcing and plant-based options. It has a goal of reducing its water usage and waste by 50% by 2030.

It received our best rating for Carbon Management and Reporting. Starbucks uses 100% renewable energy for company-operated retail operations and renewable energy powers 72% of company-operated facilities globally. It has a commitment to half its greenhouse gas emissions by 2030. In 2022 it invested in 20 new community solar projects in New York, which are now supplying solar energy to more than 24,000 households.

It has partnered with global conservation NGOs, such as Conservation International and WWF.

Palm oil sourcing

The company received our worst rating in this category. While Starbucks is a member of the Roundtable of Sustainable Palm Oil, only about 60% of the palm oil it uses is certified. Furthermore, less than 50% of its total palm ingredients originate from a physically certified supply chain which is the highest and best certification achievable.

It also doesn't publish a list of its palm mills. This is problematic because transparency around palm sourcing is key to improving practices in the industry. This includes being transparent around whether a company works with mills associated with issues like human and workers rights abuses, or deforestation.

Starbucks sells factory farmed animal products and uncertified dairy. It also doesn’t have a sustainable fish sourcing policy and it has received a boycott call for not using organic milk. As a result it lost three whole marks for animal related issues.

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The text above was written in November 2023, based on research predominantly collected in February 2022. 

Company information

Company address:.

• Annual revenue: £21,220,000,000
• Website: https://www.starbucks.com

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Associated brands

• Starbucks (UK)

Related product guides

• Coffee Shops
• Ethical Coffee & Coffee Beans

Ownership structure

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Starbucks sued for allegedly using coffee from farms with rights abuses while touting its ‘ethical’ sourcing

A consumer advocacy group is suing Starbucks, the world’s largest coffee brand, for false advertising, alleging that it sources coffee and tea from farms with human rights and labor abuses, while touting its commitment to ethical sourcing.

The case, filed in a Washington, D.C., court on Wednesday on behalf of American consumers, alleges that the coffee giant is misleading the public by widely marketing its “100% ethical” sourcing commitment on its coffee and tea products, when it knowingly sources from suppliers with “documented, severe human rights and labor abuses.”

“On every bag of coffee and box of K-cups that Starbucks sells, Starbucks is heralding its commitment to 100% ethical sourcing,” said Sally Greenberg, CEO of the National Consumers League, the legal advocacy group bringing the case. “But it’s pretty clear that there are significant human rights and labor abuses across Starbucks’ supply chain.”

The lawsuit cites reporting about human rights and labor abuses on specific coffee and tea farms in Guatemala , Kenya and Brazil , and alleges that Starbucks has continued to purchase from these suppliers in spite of the documented violations.

"We are aware of the lawsuit, and plan to aggressively   defend against the asserted claims that Starbucks has misrepresented its ethical sourcing commitments to customers," said a spokesperson for Starbucks.

In an earlier statement they said, “We take allegations like these extremely seriously and are actively engaged with farms to ensure they adhere to our standards. Each supply chain is required to undergo reverification regularly and we remain committed to working with our business partners to meet the expectations detailed in our Global Human Rights Statement ."

In Brazil, labor officials have cracked down on several reported Starbucks suppliers over abusive and unsafe labor practices in recent years, including garnishing the cost of harvesting equipment from farm workers wages, not providing clean drinking water, personal protective equipment and bathrooms, and employing underaged workers. In 2022, 17 workers, including three minors, were rescued by Brazilian inspectors from “modern slavery,” according to Reporter Brasil , at a coffee farm managed by a man whose coffee roaster company received Starbucks’ seal of certification a month earlier.

In response to the Reporter Brasil stories and reported labor abuses in Kenya and Guatemala cited in the lawsuit, Starbucks issued statements at the time that the company was “deeply concerned,” and that it would “thoroughly investigate” claims of labor violations, “take immediate action” to suspend purchases or “ensure corrective action” occurred.

Starbucks told NBC News it has since taken corrective action in both Guatemala and Kenya.

In a promotional video on its coffee academy website, a Starbucks coffee buyer says the company’s ethical sourcing stamp “means that we are buying coffee, making sure that it’s good for the planet and good for the people who produce it.”

Greenberg said the suit aims to prevent Starbucks from making claims like those — particularly its “Committed to 100% Ethical Coffee Sourcing” advertising — unless the company improves labor practices within its supply chain.

Starbucks, like many companies, uses third-party certification programs to ensure the integrity of its supply chains for tea and cocoa. The company launched its own sourcing standards, called C.A.F.E. Practices, in 2004 to oversee its coffee sourcing in more than 30 countries. The verification program is administered by a company called SCS Global Services in collaboration with Conservation International.

The verification program holds Starbucks coffee suppliers to more than 200 environmental, labor and quality standards. Farms that fail to meet those can be barred from supplying the company until corrective action is confirmed.

But there have long been issues with how effective such programs are, according to experts.

In 2021, Rainforest Alliance, the third-party that certifies Starbucks’ supply chains for tea and cocoa, was sued in D.C. court by another consumer advocacy group over “false and deceptive marketing” of Hershey’s cocoa as “100 percent certified and sustainable.” A judge ruled last year that the case could move forward only against Hershey, as the manufacturer of the products. 

Rainforest Alliance did not immediately respond to a request for comment. 

“There is this huge pile of evidence that shows that the mechanisms that [certifiers are] relying on to address problems like forced labor, child labor, gender based violence, are extremely flawed and not working very well,” said Genevieve LeBaron, director of the School of Public Policy at Canada’s Simon Fraser University.

“We have incident after incident that’s uncovered in these supply chains. And still, companies go around and make these kinds of claims that they have 100% sustainable or ethical sourcing” said LeBaron, whose research into cocoa and tea has shown that the prevalence and severity of labor violations on certified and uncertified farms was “basically identical."

LeBaron, who has consulted for the United Nations on global supply chain ethics, said the issue is not unique to Starbucks, but ethical commitments from large purchasing players like Starbucks can have an outsize impact on the integrity of supply chains if they are backed up.

Starbucks has 10 “farmer support centers ” in coffee-producing regions around the globe, including Brazil and Guatemala, but does not release public lists of certified suppliers, making it difficult to track how often its suppliers are found to be engaging in labor abuses.

“I think it is really hard to have an ethical supply chain. And I would say, you know, a lot of the reason for that is that, especially in agriculture, there’s a sort of status quo of sourcing goods way below the cost of actually producing them. And as long as you have that, you’re gonna have problems,” LeBaron said.

Kenzi Abou-Sabe is a reporter and producer in the NBC News Investigative Unit.

Adiel Kaplan is a reporter with the NBC News Investigative Unit.

MBA Knowledge Base

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Home » Management Case Studies » Case Study: Corporate Social Responsibility of Starbucks

Case Study: Corporate Social Responsibility of Starbucks

Starbucks is the world’s largest and most popular coffee company. Since the beginning, this premier cafe aimed to deliver the world’s finest fresh-roasted coffee. Today the company dominates the industry and has created a brand that is tantamount with loyalty, integrity and proven longevity. Starbucks is not just a name, but a culture .

It is obvious that Starbucks and their CEO Howard Shultz are aware of the importance of corporate social responsibility . Every company has problems they can work on and improve in and so does Starbucks. As of recent, Starbucks has done a great job showing their employees how important they are to the company. Along with committing to every employee, they have gone to great lengths to improve the environment for everyone. Ethical and unethical behavior is always a hot topic for the media, and Starbucks has to be careful with the decisions they make and how they affect their public persona.

The corporate social responsibility of the Starbucks Corporation address the following issues: Starbucks commitment to the environment, Starbucks commitment to the employees, Starbucks commitment to consumers, discussions of ethical and unethical business behavior, and Starbucks commitment and response to shareholders.

Commitment to the Environment

The first way Starbucks has shown corporate social responsibility is through their commitment to the environment. In order to improve the environment, with a little push from the NGO, Starbucks first main goal was to provide more Fair Trade Coffee. What this means is that Starbucks will aim to only buy 100 percent responsibly grown and traded coffee. Not only does responsibly grown coffee help the environment, it benefits the farmers as well. Responsibly grown coffee means preserving energy and water at the farms. In turn, this costs more for the company overall, but the environmental improvements are worth it. Starbucks and the environment benefits from this decision because it helps continue to portray a clean image.

Another way to improve the environment directly through their stores is by “going green”. Their first attempt to produce a green store was in Manhattan. Starbucks made that decision to renovate a 15 year old store. This renovation included replacing old equipment with more energy efficient ones. To educate the community, they placed plaques throughout the store explaining their new green elements and how they work. This new Manhattan store now conserves energy, water, materials, and uses recycled/recyclable products. Twelve stores total plan to be renovated and Starbucks has promised to make each new store LEED, meaning a Leader in Energy and Environmental Design. LEED improves performance regarding energy savings, water efficiency, and emission reduction. Many people don’t look into environmentally friendly appliances because the upfront cost is always more. According to Starbucks, going green over time outweighs the upfront cost by a long shot. Hopefully, these new design elements will help the environment and get Starbucks ahead of their market.

Commitment to Consumers

The second way Starbucks has shown corporate social responsibility is through their commitment to consumers. The best way to get the customers what they want is to understand their demographic groups. By doing research on Starbucks consumer demographics, they realized that people with disabilities are very important. The company is trying to turn stores into a more adequate environment for customers with disabilities. A few changes include: lowering counter height to improve easy of ordering for people in wheelchairs, adding at least one handicap accessible entrance, adding disability etiquette to employee handbooks, training employees to educate them on disabilities, and by joining the National Business Disability Council. By joining the National Business Disability Council, Starbucks gains access to resumes of people with disabilities.

Another way Starbucks has shown commitment to the consumers is by cutting costs and retaining loyal customers. For frequent, loyal customers, Starbucks decided to provide a loyalty card. Once a customer has obtained this card, they are given incentives and promotions for continuing to frequent their stores. Promotions include discounted drinks and free flavor shots to repeat visitors. Also, with the economy being at an all time low, Starbucks realized that cheaper prices were a necessity. By simplifying their business practices, they were able to provide lower prices for their customers. For example, they use only one recipe for banana bread, rather than eleven!

It doesn’t end there either! Starbucks recognized that health is part of social responsibility. To promote healthier living, they introduced “skinny” versions of most drinks, while keeping the delicious flavor. For example, the skinny vanilla latte has 90 calories compared to the original with 190 calories. Since Starbucks doesn’t just sell beverages now, they introduced low calorie snacks. Along with the snacks and beverages, nutrition facts were available for each item.

Also one big way to cut costs was outsourcing payroll and Human Resources administration . By creating a global platform for their administration system, Starbucks is able to provide more employees with benefits. Plus, they are able to spend more money on pleasing customers, rather than on a benefits system.

Commitment and Response to Shareholders

One way Starbucks has demonstrated their commitment and response to shareholder needs is by giving them large portions. By large portions, Starbucks is implying that they plan pay dividends equal to 35% or higher of net income to. For the shareholders, paying high dividends means certainty about the company’s financial well-being. Along with that, they plan to purchase 15 million more shares of stock, and hopefully this will attract investors who focus on stocks with good results.

Starbucks made their commitment to shareholders obvious by speaking directly to the media about it. In 2004, Starbucks won a great tax break, but unfortunately the media saw them as “money grubbing”. Their CEO, Howard Shultz, made the decision to get into politics and speak to Washington about expanding health care and the importance of this to the company. Not only does he want his shareholders to see his commitment, but he wants all of America to be able to reap this benefits.

In order to compete with McDonalds and keeping payout to their shareholders high, Starbucks needed a serious turnaround . They did decide to halt growth in North America but not in Japan. Shultz found that drinking coffee is becoming extremely popular for the Japanese. To show shareholders there is a silver lining, he announced they plan to open “thousands of stores” in Japan and Vietnamese markets.

Commitment to Employees

The first and biggest way Starbucks shows their commitment to employees is by just taking care of their workers. For example, they know how important health care, stock options, and compensation are to people in this economy. The Starbucks policy states that as long as you work 20 hours a week you get benefits and stock options. These benefits include health insurance and contributions to employee’s 401k plan. Starbucks doesn’t exclude part time workers, because they feel they are just as valuable as full time workers. Since Starbucks doesn’t have typical business hours like an office job, the part time workers help working the odd shifts.

Another way Starbucks shows their commitment to employees is by treating them like individuals, not just number 500 out of 26,000 employees. Howard Shultz, CEO, always tries to keep humanity and compassion in mind. When he first started at Starbucks, he remembered how much he liked it that people cared about him, so he decided to continue this consideration for employees. Shultz feels that a first impression is very important. On an employee’s first day, he lets each new employee know how happy he is to have them as part of their business, whether it is in person or through a video. His theory is that making a good first impression on a new hire is similar to teaching a child good values. Through their growth, he feels each employee will keep in mind that the company does care about them. Shultz wants people to know what he and the company stand for, and what they are trying to accomplish.

Ethical/Unethical Business Behavior

The last way Starbucks demonstrates corporate social responsibility is through ethical behavior and the occasional unethical behavior. The first ethically positive thing Starbucks involves them self in is the NGO and Fair Trade coffee. Even though purchasing mostly Fair Trade coffee seriously affected their profits, Starbucks knew it was the right thing to do. They also knew that if they did it the right way, everyone would benefit, from farmers, to the environment, to their public image.

In the fall of 2010, Starbucks chose to team up with Jumpstart, a program that gives children a head start on their education. By donating to literacy organizations and volunteering with Jumpstart, Starbucks has made an impact on the children in America, in a very positive way.

Of course there are negatives that come along with the positives. Starbucks isn’t the “perfect” company like it may seem. In 2008, Starbucks made the decision to close 616 stores because they were not performing very well. In order for Starbucks to close this many stores in one year, they had to battle many landlords due to the chain breaking lease agreements. Starbucks tried pushing for rent cuts but some stores did have to break their agreements. On top of breaching lease agreements, Starbucks was not able to grow as much as planned, resulting their future landlords were hurting as well. To fix these problems, tenants typically will offer a buyout or find a replacement tenant, but landlords are in no way forced to go with any of these options. These efforts became extremely time consuming and costly, causing Starbucks to give up on many lease agreements.

As for Starbucks ethical behavior is a different story when forced into the media light. In 2008, a big media uproar arose due to them wanting to re-release their old logo for their 35th anniversary. The old coffee cup logo was basically a topless mermaid, which in Starbucks’ opinion is just a mythological creature, not a sex symbol. Media critics fought that someone needed to protect the creature’s modesty. Starbucks found this outrageous. In order to end the drama and please the critics, they chose to make the image more modest by lengthening her hair to cover her body and soften her facial expression. Rather than ignoring the media concerns, Starbucks met in the middle to celebrate their 35th anniversary.

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Corporate Social Responsibility of Starbucks: An Ethical Case Study

Students will select a contemporary business ethics case and provide a reflection essay incorporating individual research.

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Starbucks Case Study - How Starbucks Conquered The Coffee Industry?

Devashish Shrivastava

Starbucks Corporation is an American coffee chain that was established in 1971 in Seattle, Washington. By mid-2019, the organization had a presence in over 30,000 areas around the world. Starbucks has been depicted as the fundamental delegate of "second wave espresso," a reflectively-named development that advanced high-quality espresso and specially simmered coffee. Starbucks now uses robotized coffee machines for proficiency and well-being.

Starbucks serves hot and cold beverages, entire bean espresso, micro-ground moment espresso known as VIA, coffee, caffe latte, full-and free leaf teas such as Teavana tea products, Evolution Fresh squeezes, Frappuccino refreshments, La Boulange baked goods, and bites (for example, chips and wafers); some offerings such as the Pumpkin Spice Latte are explicit to the territory of the store. Numerous Starbucks outlets sell pre-bundled nourishment items, sweltering and cold sandwiches, and drinkware such as cups and tumblers. Furthermore, there are Select "Starbucks Evenings" areas that offer brew, wine, and appetizers.

Starbucks first ended up productive in Seattle in the mid-1980s. Despite an underlying financial downturn with its venture into the Midwest and British Columbia in the late 1980s, the organization experienced rejuvenated success with its entrance into California in the mid-1990s. Starbucks opened an average of two new stores every day between 1987 and 2007. On December 1, 2016, Howard Schultz reported he would leave his position as the CEO and would be supplanted by Kevin Johnson. Johnson accepted the role of the CEO of Starbucks on April 3, 2017, and Howard Schultz resigned to end up as the 'Chairman Emeritus', effective from June 26, 2018. Kevin Johnson is currently serving as the CEO and President of Starbucks.

Starbucks - Company Highlights

Startup Story Of Starbucks Corporation History Of Starbucks Corporation Starbucks - Name and Logo Starbucks Expansion Journey Starbucks Corporation in India Business Strategy Of Starbucks In India Products Of Starbucks Corporation Business Growth Of Starbucks Corporation Over The Years Future Plans Of Starbucks Corporation

Startup Story Of Starbucks Corporation

If you are wondering how did Starbucks start? Then, the story of Starbucks started back in 1971, when the company was a roaster and retailer of whole bean and ground coffee, tea and spices with a single store in Seattle’s Pike Place Market.

Zev Siegel stated that at that time he knew the coffee industry inside and out, he was well-versed, especially with the gourmet end of the industry. Besides, he was also known as the most educated coffee guy in the country at that time. So, the three college friends - Zev Siegel, Jerry Baldwin and Gordon, started out with their coffee bean shop and roastery at Seattle’s famous Pike Place Market in 1971. Eventually, they found a mentor in Alfred Peet, who was the founder of Peet’s Coffee and the man responsible for bringing custom coffee roasting to the U.S. and started with the coffee business in full swing. Starbucks initially began by selling coffee beans that were roasted by Peet's, a gourmet coffee company in Berkeley, California, and later on, started roasting on their own.

History Of Starbucks Corporation

The first Starbucks store was initiated in 1971 in Washington by 3 individuals who met while they were studying at the University of San Francisco: English educator Hun Baldwin, history educator Zev Siegl, and author Gordon Bowker. The trio was encouraged to sell top-notch espresso beans and hardware after businessman Alfred Peet showed them his style of simmering beans.

During this time, the organization sold simmered, entire espresso beans. During its first year of activity, Starbucks bought green espresso beans from Peet's, and then started purchasing legitimately from producers.

Starbucks - Name and Logo

Bowker reviews that Terry Heckler, with whom Bowker claimed a publicizing office, thought words starting with "st" were ground-breaking. The organizers conceptualized a rundown of words starting with "st" and in the long run arrived on "Strabo," a mining town in the Cascade Range. The team then finalized on "Starbuck," the name of the young chief mate in the book "Moby-Dick".

Starbucks has given too many slogans/taglines already among which the most popular one is - " Brewed for those who love coffee".

Starbucks Expansion Journey

In 1984, the first proprietors of Starbucks, driven by Jerry Baldwin, acquired Peet's. During the 1980s, all-out offers of espresso in the US were falling. However, offers of strength espresso expanded, shaping 10% of the market in 1989; it stood at just 3% in terms of market share in 1983. By 1986, the organization worked six stores in Seattle and had just barely started to sell coffee.

In 1987, the first proprietors sold the Starbucks chain to the previous manager Howard Schultz, who rebranded his II Giornale espresso outlets as Starbucks and immediately extended. Starbucks then launched its outlets outside Seattle at Waterfront Station in Vancouver, British Columbia, and Chicago, Illinois. By 1989, 46 stores existed over the Northwest and Midwest, and every year Starbucks was simmering more than 2,000,000 pounds (907,185 kg) of coffee. At the hour of its first sale of stock (IPO) on the financial exchange in June 1992, Starbucks had 140 outlets with an income of $73.5 million, up from $1.3 million in 1987.

The organization's fairly estimated worth was $271 million at this point. The 12% segment of the organization that was sold raised around $25 million for the organization, which encouraged a multiplying of the number of stores throughout the following two years. By September 1992, Starbucks' offer cost had ascended by 70% to more than multiple times the income per portion of the past year. In July 2013, over 10% of in-store buys were made on the client's cell phones utilizing the Starbucks app.

The organization used the versatile social media stage when it propelled the "Tweet-a-Coffee" campaign in October 2013. People had the option to buy a $5 gift voucher for a companion by entering both "@tweetacoffee" and the companion's handle in a tweet. Research firm Keyhole observed the advancement of the event and a media article from December 2013 detailed that Starbucks had discovered that 27,000 individuals had taken an interest and $180,000 of buys were made to date.

As of 2018, Starbucks is positioned 132nd on the Fortune 500 rundown of the biggest United States organizations by revenue. In July 2019, Starbucks announced a "monetary second from last quarter total compensation of $1.37 billion, or $1.12 per share, up from $852.5 million, or 61 pennies for each offer, a year sooner." The organization's fairly estimated worth of $110.2 billion expanded by 41% in the middle of 2019. The income per share in quarter three was recorded at 78 pennies, considerably more than the estimate of 72 cents.

Starbucks Corporation in India

In January 2011, Starbucks Corporation and Tata Coffee reported designs to start opening Starbucks outlets in India. Despite a bogus beginning in 2007, in January 2012, Starbucks declared a 50:50 joint endeavour with Tata Global Beverages, called Tata Starbucks Ltd. , which would possess and work outlets marked "Starbucks, A Tata Alliance". Starbucks had endeavoured to enter the Indian market in 2007. However, it didn't provide any explanation behind its withdrawal of it.

It was on October 19, 2012 that Starbucks opened its first store, a 4,500 sq ft store in Elphinstone Building, Horniman Circle, Mumbai. Starbucks opened its first cooking and bundling plant in Coorg, Karnataka in 2013 to supply its Indian outlets. The company extended its reach to Delhi on 24 January 2013 by opening 2 outlets. Tata Global Beverages declared in 2013 that they would have 50 areas before the end of the year, with a venture of ₹4 billion ($58 million). The organization did open its 50th store in India on July 8, 2014.

The third city of India to get a Starbucks outlet was Pune, where the organization opened an outlet at Koregaon Park on 8 September 2013. Starbucks opened a 3,000-square-foot lead store at Koramangala, Bangalore on 22 November 2013, making it the fourth city to have an outlet. Starbucks opened the biggest espresso-forward store in the nation at Vittal Mallya Road, Bangalore on 18 March 2019. The store is estimated at 3,000 sq ft and is Starbucks' 140th outlet in India.

Tata Starbucks opened 25 stores between 2017 and 2018, which went up to 30 during 2018-19. On 21 February 2019, CEO Navin Gurnaney reported that Tata Starbucks would use only compostable and recyclable bundling materials over the entirety of its stores from June 2020.

Starbucks reported its entrance in Gujarat on 7 August 2019. The organization opened five stores in Surat and Ahmedabad the following day. Starbucks' leader store in the state is situated at Prahlad Nagar, Ahmedabad, and offers more vegan alternatives than other Indian outlets. CEO Navin Gurnaney expressed that the organization would open more than 30 stores in the 2019-20 financial year, of which 11 have already been opened.

Business Strategy Of Starbucks In India

Starbucks' strategies for business in India seemed rock-solid but the brand wasn't completely immune still. In any case, the world's biggest bistro chain is building its position cautiously via a progression of well-picked steps. Numerous worldwide brands have entered India since the 1990s, being pulled in by its developing and optimistic customer base. Yet, not all have succeeded.

Starbucks isn't the primary contestant in India's composed espresso showcase; so it doesn't have any first-participant advantage. Cafe Coffee Day (CCD) is the market head while Barista Lavazza was the main espresso chain to open for business. Both are valued by the white-collar class. Costa Coffee, Coffee Bean and Tea Leaf (CBTL), and Gloria Jean are valued by the rich group in India.

India is customarily a tea-drinking nation, so espresso chains have concentrated on giving a feel where individuals can unwind and invest energy with one another. This setup implies higher capital expenses. It is different from the US, where the vast majority have a liking for espresso. The Indian buyer base has likewise advanced in the recent decade. What can worldwide brands like Starbucks do to augment their odds of achievement in India? Here are a few thoughts:

Picking a Local Partner

Worldwide brands face the difficult choice of either going solo or tying up with a nearby accomplice. Starbucks' choice to team up with India's TATA Global Beverages demonstrates attention to utilizing different advantages. The TATA Group is one of India's morally determined brands, an observation passed on about Starbucks India too.

Given that India produces espresso beans in just a couple of spots, the other sourcing alternative was bringing in the beans. Be that as it may, this would have raised costs fundamentally.

Tata's espresso plant in Karnataka has been contracted to supply beans to Starbucks' universally, making common cooperative energies. It has contracted to take into account TATA's TAJ SATS, which supplies to TATA's top-notch lodging network – The TAJ. The TATAs are put into the retail part with store brands like Westside, Tanishq, Croma, Star Bazaar, and so forth. Starbucks can use them for information sharing on Indian land, territory points of interest, and handling land administrations. This would enable its very own development to outline. This strategy gives scope for store-in-store deals.

Consistency in Store Arrangements

This keeps up the one-of-a-kind selling purpose of customer experience and allows to pick up economies of scale on CAPEX. Starbucks plans to have a similar store group crosswise over India. However, the size can change depending on financial matters. This is how it works all around. Starbucks wants to provide an agreeable 'café' experience. Having a similar organization gives clients the solace of accepting the equivalent 'Starbucks' vibe any place they go throughout the world.

Keeping the store designs steady means it needs to pick and open new areas stringently, to such an extent that the area can yield a throughput by the venture. Its methodology in-store arrangement is different from CCD, which has picked various configurations to tap the potential interest in any region. CCD has opened a couple of premium outlets dependent on the area's customer profile . It has additionally gone for non-store organizations like takeaway booths and candy machines. Be that as it may, Starbucks may expect that such non-store configurations may weaken its image esteem.

Estimating the Pace of Expansion

India is the place where an inability to screen primary concerns has tossed numerous organizations out of the rigging. So, a top-line just approach doesn't work here. Since Starbucks needs to pick new areas stringently by its equivalent configuration approach, it has decided on a deliberate pace of extension. It is concentrating on the budgetary feasibility of every outlet, as opposed to going for an aggressive development plan which may have brought about rehashed calls for capital.

This operational process is different from its system in the USA and China where it has fabricated scale by opening stores in pretty much every area – being the main port-of-call for espresso by basically being all over the place. CCD's methodology behind adaptable store organizations was to guarantee there is a CCD bistro at a simple reach. It is intriguing to check its normal store gainfulness given its scale.

Guaranteeing Top-Authority Backing and Responsibility

Top initiative responsibility from the two sides of the organization, Tata and Starbucks, has been plentifully clear. Starbucks took as much time as is needed to enter the market (6 years), recognizing that India was a mind-boggling market and required cautious passage arranging. The two sides have spoken finally about their dedication and shared their future plans to give their business a new direction toward growth.

Altering Contributions to Suit Indian Market and Client Needs

Being adjusted to Indian culture, tastes, and inclinations conveyed at a suitable "esteem" guarantees customer importance, construct, and continued utilization. Starbucks mirrors this comprehension – as observed through a blend of western staples, a wide scope of intriguing Indian tidbits similar to confined refreshments on the idea. Since its experience ( and item as well, however to a lesser degree) is its image guarantee, its test lies in conveying an all-around steady, yet locally significant brand experience.

The stores, or the "third spot" as Starbucks calls them, have been altered likewise. The stores don't pursue the worldwide layout and appear to have been planned with consideration, with neighbourhood contacts consolidated. Stores in various urban communities have been structured unexpectedly, mirroring the neighbourhood culture – for e.g., New Delhi's store has ropes and chat on the dividers and henna designs on the floor, though the Pune store has a rich showcase of collectables and copper.

There appears to be sufficient utilization of shading – something missing in the US. The stores have been intended to convey a particular, premium café experience, predictable, and in a state of harmony with the one conveyed over the rest of the world.

Making Inventive and Restricted Plan of Action

Starbucks appears to have made a confined plan of action, planned for conveying a universally reliable item and involvement with locally-focused costs. The Tata group conveys a major sourcing advantage (attributable to its quality over the generation chain, developing, broiling, and exchanging espresso), yet it has just gone past that to develop and support associations with nearby espresso cultivators – putting resources into structure economical cultivating rehearses. All of Starbucks' espresso is sourced locally, a first-ever for the organization.

Scaling up using Arrangements and Organizations

The Tata organization is the genuine overthrow in the Starbucks passage story. Having Tata as an accomplice is gigantically profitable, not due to the validity and strength it offers, or because it coordinates the scale and stature of Starbucks as an organization.

It offers numerous advantages catalyzing pretty much every market section achievement variable - for example, The Tata group has involvement in the retail business , a solid reputation in advancing new pursuits, gives a sourcing advantage through Tata espresso, offers access to high traffic areas using its lodgings and other retail outlets, guarantee excellent nourishment and refreshment supply through its F&B business and so forth.

Furthermore, the potential for an effective organization is amazingly high given Starbucks' and Tata's mutual qualities – the two of them have a solid social inner voice and are resolved to "give back" to the general public and network.

Influencing India for Worldwide Items

Not long after it finished its first year, Starbucks reported that it was serving top-quality Indian Arabica espresso as "Indian coffee" in different markets. Another world-class office for cooking and bundling has just been initiated in Coorg, Karnataka; the results of which are to be analyzed in India and abroad.

Overseeing Discernment and Guidelines

This viewpoint is tied in with structure, a solid positive observation and a picture for the business and brand crosswise over key outer partners and crowds – incorporating the administration, corporate accomplices, networks inside the eco-framework, and customers on the loose. Given what Starbucks has figured out how to accomplish in a year and a half since dispatch, it appears to be genuinely evident that its thought combined with the Tata advantage (critical reach and impact) has helped in developing solid connections and a positive picture with key outside partners and voting demographics.

Engage Nearby Association

Starbucks is by all accounts constructing a nation-explicit activity with nearby individuals in charge and overall unmistakable customer interface focuses, giving them the necessary position to coordinate and work. There is overwhelming interest in enlisting the perfect individuals and giving the essential preparation – to install and instil the organization's culture and administration models.

Along these lines, how has Starbucks fared against the McKinsey spread out variables for long-haul India achievement? Its accomplishments against the scorecard look noteworthy. With thorough vigorous passage arranging and brilliant and quick execution, the multi-month-old endeavour appears to have impressive force, making purchaser and network-driven ventures and focused on sustaining its centre business and brand. It appears to be very much set to "win" in India.

Whether Starbucks will collect a huge piece of the overall industry and accomplish its objective of India being among its best 5 markets over the long haul is not yet clear. It's still early days, yet for the organization, this appears to be an incredible beginning and a great globalization model for multinationals looking for an India section.

Products Of Starbucks Corporation

Aside from the typical items offered globally, Starbucks in India has some Indian-style item contributions, for example, Tandoori Paneer Roll, Chocolate Rossomalai Mousse, Malai Chom Tiramisu, Elaichi Mewa Croissant, Chicken Kathi Roll, and Murg Tikka Panini to suit Indian customers. All coffees sold in Indian outlets are produced using Indian broiled espressos by Tata Coffee. Starbucks additionally sells Himalayan packaged mineral water. Free Wi-Fi is accessible at all Starbucks stores.

In January 2017, Tata Starbucks presented Starbucks' tea image "Teavana". Teavana offers 18 unique assortments of tea in India. One of the assortments called the India Spice Majesty Blend was explicitly created for the Indian market and is just accessible in India. India Spice Majesty Blend is a mix of full leaf Assam dark tea injected with entire cinnamon, cardamom, cloves, pepper, star anise, and ginger. On 15 June 2015, Tata Starbucks reported that it was suspending the utilization of fixings that had not been affirmed by the Food Safety and Standards Authority of India (FSSAI).

The organization didn't indicate what the fixings were or which items they were utilized in. The organization additionally expressed that it was applying for FSSAI endorsement for these ingredients.

As per the Latte Index positioning of the expense of a tall hot latte at Starbucks in 44 nations, India was the fifth most costly nation to buy the drink dependent on January 2016 costs. The record distributed by US-based buyer research firm ValuePenguin found that a tall hot latte cost $7.99 in India, far higher than the $2.75 it costs in the least expensive nation, the United States, yet much lower than the $12.32 in the most costly nation, Russia .

Tata Starbucks propelled the Starbucks Delivers program in mid-2019. The administration offers home conveyance from Starbucks outlets through an organization with Swiggy. The administration was first propelled in Mumbai, with designs to turn it out to other cities.

In its menu, the Tata Starbucks company has launched ice-creams as their new products. The frozen delights are available even in flavours like java chip and caramel macchiato among others and will come in takeaway tubs and single scoops. The ice-creams are now available in 50-60% of the Starbucks stores.

Business Growth Of Starbucks Corporation Over The Years

Tata Starbucks, a 50:50 joint endeavour between Tata Global Beverages and Starbucks Coffee of the US, has announced a 30%  top-line development in financial 2018-19, driven by new store openings and improved execution. Tata Starbucks, which is hoping to make back the initial investment in the current money, has opened 146 stores to date. Tata Starbucks announced "twofold digit top-line development - 30% for the entire year, driven by new stores and improved store execution," Tata Global Beverages Ltd (TGBL) said in a financial specialists' introduction. Tata Starbuck's income for 2018-19 is required to be approximately INR 450 crores.

TGBL said Tata Starbucks opened 30 outlets in the past financial year, out of which 15 new stores were opened during the last quarter of the money-related year. The organization claimed detailed benefits at the store level; all urban areas were likewise productive, and additionally saw an ascend in nourishment share in general deals.

The Starbucks company has added around 40 stores in FY21 but the company had recorded a 33% Y-O-Y  fall in its revenues during the same fiscal. According to the Sushant Dash, CEO of Tata Starbucks, the recovery that the company has seen after the second wave of COVID-19 was better than what it saw after the first wave of the deadly pandemic. The quarterly growth after Q2 FY22 was 120% more than what it saw during the same period in the previous fiscal. The company has hugely focused on home deliveries ever since the pandemic broke out. It has already addressed concerns associated with the spillage and other challenges pertaining to home delivery, which contributed to over 18% of the total sales that the company witnessed this fiscal, as per the reports in November 2021. Furthermore, the company has also added ice-creams to their menu in flavours like java chip and caramel macchiato. The Sanjeev Kapoor menu is another thing that has been freshly launched by Tata Starbucks. Besides, the company also launched a one-litre freshly brewed beverage and at-home coffee.  

Future Plans Of Starbucks Corporation

Tata Starbucks Pvt. Ltd. is looking to forcefully grow its impression in the Indian market with its eyes on the quickly spreading "espresso culture" among the twenty to thirty-year-olds and upwardly versatile customers. Tata Starbucks, a JV between US-based Starbucks Coffee Company and Tata Global Beverages Ltd, hopes to set up altogether more number stores this monetary than it did previously.

Starbucks is hopeful about solid business development in India throughout the following year as it means to leave red in monetary numbers after 2020. "Our proceeded with development in topline and reasonable methodology towards extension will enable us to accomplish make back the initial investment by March 2020," Navin Gurnaney, CEO, Tata Starbucks disclosed to Business Line in the wake of declaring five new stores in Gujarat - three in Ahmedabad and two in Surat. Gurney likewise included, "First time in quite a while, we are opening five stores in any state in one go.

Gujarat is a significant market for us. In the wake of opening these five stores on Thursday, the all outnumber of hides away goes up to 157 in India." Starbucks entered India with its first store opened at Mumbai in 2012. Of the 157, the organization has opened all out 11 stores so far in this financial, as against complete 30 stores opened during 2018-19. It takes into account 270,000 clients each week in India. The organization had announced a turnover of INR 442 crores for the monetary 2018-19.

"Espresso business in India is developing significantly. The espresso culture is being initiated by recent college grads, upwardly versatile, and individuals who travel and get brand. Two years back, we set up 25 stores (in a year). During the last financial 2018-19, we included 30 stores.

This year we will beat that number considerably and by end of March 2020, we will have included a lot a greater number of stores than we included in the past," Gurney said. With per store venture prerequisites being evaluated at INR 1.7-2 crores, the complete CAPEX plan by the organization works out in overabundance of INR 50 crores during current monetary on the off chance that it opens more number of stores than a year ago. Be that as it may, Gurnaney ceased from giving venture figures for 2019-20.

The organization is likewise open to different open doors for development including inorganic development through acquisitions. Be that as it may, when tested about any probability of a venture plan in the espresso chain Cafe Coffe Day (CCD), Gurnaney denied estimating any discussions for securing. "We are very hopeful about India. We will be attentively forceful (to extend). (At present) we are not in discussions with anyone for obtaining.

In any case, we are hoping to develop constantly," he included. With an end goal to upgrade the client experience, Starbucks is presenting new nourishment things, taking into account all client needs including breakfast and lunch. The income share from nourishment things is right now around 25%, even as it keeps on developing with new things to meet the client's needs.

Who founded Starbucks?

Starbucks was started by Hun Baldwin, Zev Siegl, and Gordon Bowker in 1971.

Where was the first Starbucks started?

Starbucks was started in Pike Place Market, Seattle, Washington, United States.

When was Starbucks started in India?

Starbucks was launched in India in 2012.

What is the revenue of Starbucks?

Starbucks revenue was recorded $29.02 billion in 2021.

How many Starbucks stores are there worldwide?

There are 33,830 Starbucks stores in the world as of 2021.

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Some brands make decaf coffee with methylene chloride. Advocates want the paint stripper banned

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• Gabrielle Healy
• Allison Hagan

Some consumer advocates are pushing the federal government to ban a chemical that's often used in the process of producing decaffeinated coffee.

The group Clean Label Project says companies like Starbucks and Dunkin’ use methylene chloride to remove the caffeine. While the Environmental Protection Agency has banned the chemical’s use as a paint stripper, the Food and Drug Administration still allows its use in decaffeination.

“Methylene chloride works as a solvent. It binds to the caffeine in coffee so that it can essentially be discarded,” says STAT’s Nick Florko . “The process actually isn't that different from how paint stripper is used to remove paint.”

In the case of paint stripper, the EPA banned methylene chloride because consumers were directly exposed to it. But with decaf, people using the product aren’t breathing in the chemical, Florko explains.

The cancer risk for decaf drinkers has been reported to be very low since the beans are roasted at a high temperature after the chemical is used. In the 1980s, the FDA found that the risk of cancer for people who drink multiple cups of decaf per day is one in a million, Florko says.

“That estimate does have some flaws, namely the fact that it assumes a cup of decaf is about five ounces, which is pretty small,” he says. “That's less than half the size of a tall Starbucks cup.

More recent studies have shown methylene chloride causes cancer in lab animals . Consumer groups cite a 1950s law that says the FDA can’t approve food additives that are shown to cause cancer in people or animals, Florko says.

Consumer groups argue that companies can use other methods to decaffeinate coffee. Some chains including Peet’s Coffee and Caribou Coffee use the Swiss water method, which involves soaking coffee beans in water and filtering out the caffeine.

A group of coffee makers against banning methylene chloride recently wrote the FDA saying, “true coffee aficionados in blind tastings” prefer coffee decaffeinated with the chemical, Florko says, “which is a pretty funny claim if you consider the fact that we're talking about coffee here that's essentially rinsed in paint thinner.”

The small FDA office in charge of reevaluating existing food additives has acknowledged its limited resources to respond to these pending petitions, Florko says.

“Time will tell,” he says.

Gabrielle Healy produced and edited this interview for broadcast with Peter O'Dowd . Allison Hagan  adapted it for the web.

This segment aired on April 2, 2024.

• Dark chocolate is high in cadmium and lead. How much is safe to eat?

Scott Tong Co-Host, Here & Now Scott Tong joined Here & Now as a co-host in July 2021 after spending 16 years at Marketplace as Shanghai bureau chief and senior correspondent.

Gabrielle Healy Producer, Here & Now Gabrielle Healy is a producer at Here & Now.

Allison Hagan Digital Producer, Here & Now Allison Hagan is a digital producer for Here & Now.

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10 popular McDonald's menu items that cost up to 168% more now than a decade ago

• McDonald's has increased prices the quickest of 12 fast-food chains since 2014, a new report found.
• Collectively, the cost of a group of the most popular McDonald's items has doubled in that time.
• Price increases at Starbucks and Subway were much closer to inflation.

Your favorite McDonald's meal might cost twice as much as it did 10 years ago.

Collectively, a selection of McDonald's most popular items, from the Big Mac to a medium order of fries, doubled in price between 2014 and 2024, a report by FinanceBuzz found. That increase was the most of several major fast-food chains that FinanceBuzz, a finance-news and -research website, examined.

Over the same period, inflation rose 31%, per the report.

Among the biggest McDonald's price hikes was for the McDouble sandwich, which went from an average price of $1.19 in 2014 to $3.19 in 2024 — a 168% increase. The cost of a Quarter Pounder with cheese meal also more than doubled, from an average of $5.39 in 2014 to $11.99 this year, according to the report.

A McDonald's spokesperson said the numbers were "not an accurate representation of pricing at McDonald's restaurants" but did not provide alternative estimates of how much the chain had raised prices.

"As the article itself notes, pricing is set by individual franchisees and varies by restaurant," the spokesperson said, referencing the FinanceBuzz report.

Burger King told Business Insider that it had "always offered quality food at affordable prices, and we will continue to be very thoughtful about making sure our guests receive great value for the money they spend with us."

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A Starbucks spokesperson said that the chain was "evaluating and adjusting prices on an ongoing basis."

Spokespeople for the other nine restaurants mentioned in the study did not immediately respond to requests for comment from BI.

FinanceBuzz looked at the prices of 10 menu items from each restaurant examined in the study. It collected historical pricing data and, in the case of McDonald's, adjusted for the variety of pricing strategies used by franchisees, it said.

McDonald's has increased prices multiple times over the past decade. One of the most visible examples is the demise of its dollar menu , which now includes items that cost up to $3 — and few, if any, that actually sell for $1.

Executives acknowledged in February that McDonald's price increases had put off customers who made $45,000 a year or below. Many are ordering less at the chain's restaurants and eating at home more often, they said.

But other restaurants raised prices nearly as much during the decade. The fried-chicken chain Popeyes increased prices by 86%, while Taco Bell hiked them by 81%, the study found.

Not all chains were as aggressive with their increases. Both Subway and Starbucks increased prices by 39%. At Starbucks, the menu price of some products rose slower than broader inflation: The average cost of a caramel macchiato went up just 17% over the decade, for example.

Inflation has slowed in recent months, and some restaurant chains have indicated they plan to slow price increases in 2024.

But other costs, such as employee pay , remain high.

Inflation is still increasing, which means higher prices at many fast-food restaurants are here to stay, Daniel Roccato, a clinical professor of finance at the University of San Diego's Knauss School of Business, said.

"We won't see prices drop, but we can expect a pause," he said in FinanceBuzz's report.

Do you work at McDonald's or another restaurant chain and have a story idea? Reach out to this reporter at [email protected].

Watch: US vs India McDonald's | Food Wars

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