Criticism of Starbucks

Starbucks, an American coffee company and coffeehouse chain, is the subject of multiple controversies. Public and employee criticism against the company has come from around the world, including a wide range issues from tax avoidance in Europe, anti-competitive practices in the United States, human rights issues in multiple countries and labor issues involving union busting, questions about pay equity and ethics in partnerships in Africa.

European tax evasion

In October 2012, Starbucks faced criticism after a Reuters investigation found that the company reportedly paid only £8.6 million in corporation tax in the UK over 14 years, despite generating over £3 billion in sales—this included no tax payments on £1.3 billion of sales in the three years prior to 2012.[1][2] It is alleged that Starbucks was able to do this by charging high licensing fees to the UK branch of the business, allowing them to declare a £33 million loss in 2011.[3] The UK subsidiary pays patent fees to the US subsidiary, purchases coffee beans from the Netherlands subsidiary (where corporation tax is lower than in the UK), and uses the Swiss subsidiary for other "miscellaneous services".[4] A YouGov survey suggested that Starbucks' brand image was substantially weakened by the controversy surrounding how much tax it pays in the UK several weeks after the allegations surfaced.[5]

Marketing strategy

Some of the methods Starbucks has used to expand and maintain their dominant market position, including buying out competitors' leases, intentionally operating at a loss, and clustering several locations in a small geographical area (i.e., saturating the market), have been labeled anti-competitive by critics.[14] For example, Starbucks fueled its initial expansion into the UK market with a buyout of Seattle Coffee Company but then used its capital and influence to obtain prime locations, some of which operated at a financial loss. Critics claimed this was an unfair attempt to drive out small, independent competitors, who could not afford to pay inflated prices for premium real estate.[15]

Antitrust lawsuit

In May 2008, Starbucks settled an antitrust lawsuit brought by Bellevue coffee-shop operator Penny Stafford. This resulted in a $3.8 Billion loss for Starbucks Seattle; this amount being recently published from Starbucks in April 2020.[16][17][18]

Opening without planning permission

Starbucks has been accused by local authorities of opening several stores in the UK in retail premises, without the planning permission for a change of use to a restaurant. Starbucks has argued that "Under current planning law, there is no official classification of coffee shops. Starbucks, therefore, encounters the difficult scenario whereby local authorities interpret the guidance in different ways. In some instances, coffee shops operate under A1 permission, some as mixed use A1/A3 and some as A3". In May 2008, a branch of Starbucks was completed on St. James's Street in Kemptown, Brighton, England, despite having been refused permission by the local planning authority, Brighton and Hove City Council, who said there were too many coffee shops already present on the street.[19][20] Starbucks appealed the decision by claiming it was a retail store selling bags of coffee, mugs, and sandwiches, gaining a six-month extension,[21] but the council ordered Starbucks to remove all tables and chairs from the premises, to comply with planning regulations for a retail shop.[22] 2500 residents signed a petition against the store,[23]

Shark fin

Environmental protestors in Hong Kong in June 2018 extended their campaign against Maxim's Caterers to also target Starbucks. This is due to Starbucks awarding regional licenses to Maxims in Hong Kong, Macau, Singapore and Vietnam.[32] On June 15, 2018, protestors targeted Maxim's headquarters in a demonstration that also highlighted Maxim's being a regional licensee for Starbucks.[33][34]

Overpricing

In October 2013, China Central Television accused Chinese Starbucks of over-pricing. The report compared the price of a tall (12 fl. oz., 354 mL) latte in Beijing, Chicago, London, and Mumbai. It was found that Beijing stores charged the most while Mumbai stores charged the least. It was also found that a tall latte cost 4 Chinese yuan (approx. USD $0.67) to make, but it sold at 27 yuan (approx. USD $4.50).[35][36]

Underfilled lattes

In April 2016, a class-action lawsuit was pressed against Starbucks after multiple reported incidents of the company purposely underfilling their latte beverages to reduce milk costs.[37][38] After two years of legal proceedings, the lawsuit was dismissed.[39][40]

Fair Trade, Oxfam, and Ethiopian coffee farmers

In October 2006, the British NGO, Oxfam, accused Starbucks of financially wounding Ethiopian coffee farmers by violating Fairtrade agreements. Specifically, Oxfam stated that Starbucks was depriving Ethiopian farmers of $88 million a year[41] by depriving the Ethiopian government of trademarking a number of its local coffee beans. Starbucks responded to the accusations by stating Oxfam's claims were misleading, and wished it would stop deceiving the public.

In May 2007, both Starbucks and the government of Ethiopia signed a licensing, distribution, and marketing agreement, recognizing the importance and integrity of Ethiopia's specialty coffee names.[42] These initiatives allow farmer cooperatives to earn more from its coffee brands, and enable poor growers to capture a greater share of the retail price.[42]

Cups

Allegations of support for Israel and boycott

U.S. military shared email on Iraq

A US Marines Sergeant emailed ten of his friends in August 2004 having wrongly been told that Starbucks had stopped supplying the military with coffee donations because the company did not support the Iraq War. The email was shared online with tens of millions of people. Starbucks and the originator sent out a correction,[81] but Starbucks' VP of global communications, Valerie O'Neil, said in September 2009 that the email was still being forwarded to her every few weeks.[82][83][84]

Gun controversy

As gun laws in many US states have become more relaxed, and more states have adopted open carry or concealed carry statutes, some gun owners have begun carrying guns while performing everyday shopping or other tasks. Many stores and companies have responded by banning the carrying of guns on their premises, as allowed by many states' local laws. Starbucks has not instituted an official policy banning guns in their stores. In 2010, the Brady Campaign proposed a boycott of Starbucks due to their gun policy.[85] At that time, Starbucks released a statement saying "We comply with local laws and statutes in all the communities we serve. That means we abide by the laws that permit open carry in 43 U.S. states. Where these laws don't exist, openly carrying weapons in our stores is prohibited. The political, policy and legal debates around these issues belong in the legislatures and courts, not in our stores."[86][87]

In 2012, the National Gun Victims Action Council published an open letter to Starbucks, asking them to revise their policy, and also proposed a "Brew not Bullets" boycott of the chain until the policy is changed, with Valentine's Day selected as a particular day to boycott the chain.[88]

Political positions

California cancer warning rule

In March 2018, a California judge ruled that Starbucks and other companies must provide warning labels on all coffee products, warning consumers of chemicals that may cause cancer, a requirement by California law which Starbucks was found in violation of.[108][109] The chemical in question is acrylamide, a carcinogen byproduct of roasted coffee beans found in high levels throughout brewed coffee. Declining to comment, Starbucks instead referred to a statement by the National Coffee Association claiming that cancer warnings on products would be "misleading".[108] After the first phase of the trial, Starbucks may be subject to civil proceeding penalties of fines up to $2,500 per consumer exposed over the last eight years.[109]

Philadelphia arrests

On April 12, 2018, two African-American men, Donte Robinson and Rashon Nelson, were arrested in a Starbucks store in Philadelphia, Pennsylvania.[110] A witness at the time of the arrests said that the men asked the staff if they could use the bathroom to which an employee said it was reserved for paying customers. The men waited at a table for another person without ordering and were instructed by the staff to either make a purchase or leave. When they did not comply, the store manager called the police. A police incident report later released revealed the two men had cursed at the manager and repeatedly insulted the police.[111] Robinson and Nelson were arrested, but released without charges being pressed.[112] The video of the arrest went viral and prompted the CEO of Starbucks Kevin Johnson to issue an apology. On ABC's Good Morning America, Johnson appeared for an interview and expressed his desire to meet with the men in person to apologize. He referred to the arrests as "reprehensible", and promised to take steps to prevent future incidents.[113] Philadelphia mayor Jim Kenney criticized the company and called for revisions of the company's policies.

Pay equity

In March 2018, Starbucks announced that it had closed its gender and racial pay gaps in the United States, reaching 100% pay equity.[126][127] The following year, shareholder activist, Natasha Lamb of Arjuna Capital, filed a shareholder proposal for median pay disclosure from Starbucks to prove their claim. Starbucks provided the requested data, and Arjuna withdrew its proposal prior to the shareholder vote.[128] However, some were skeptical of their claim and the provided data, including data scientists, who alleged that Starbucks was sharing the data in a way that hid discrepancies.[129]

In early 2019, Cher Scarlett, a former lead software engineer at the company who worked remotely out of St. Louis, Missouri, called out on Twitter that she had been subjected to a "long-standing" gender-based wage gap that she fought to have successfully addressed, and wrote a blog post about what she alleged to be a practice at the company of paying lower wages in areas that were predominantly black.[130]

Labor issues and union busting

See also

• History of Starbucks
• Criticism of McDonald's