Seattle, WA – Starbucks announced on Monday that it will be increasing pay for its hourly retail employees in the United States by at least 3% starting January 1st, 2024. This move is part of an expanded benefits package that the coffee giant says goes “well beyond the industry average.”
Differentiated Wage Increases Based on Tenure
Starbucks stated that eligible employees with 2-5 years of service will receive at least a 4% raise, while partners with 5 or more years at the company will get a minimum 5% pay increase.
The pay raises will impact nearly 230,000 Starbucks employees at over 15,000 stores across the country. A company spokesperson confirmed there will be no increases to menu prices to cover the additional labor costs.
“Starting with competitive pay — Starbucks provides U.S. hourly retail partners an average wage of nearly $17.50 per hour, a barista wage range between $15 and $24 per hour and a total compensation, with benefits, of approximately $27 per hour,” the company said.
Additional Benefits Beyond Wage Increases
Along with the pay raises, Starbucks is expanding its overall benefits package in what it describes as “well beyond the industry average.”
Some highlights of the enhanced benefits include:
- Faster accrual of paid vacation time
- New financial planning tools and skills-building programs
- More flexible, partner-focused scheduling
- Introduction of the first-ever North America Barista Championship
Investing in Employees Drives Success Says Starbucks Executive
Sara Trilling, Executive Vice President and President of Starbucks North America, emphasized the critical role employee investments play in the company’s success:
“Investing in our partners is what drives our success. It’s what makes us all partners. And an important way we do this is by investing in our partners’ journey, to bridge to a better future at Starbucks and beyond.”
Over 20% of FY 2023 Profits Reinvested in Employees
Starbucks also revealed that more than 20% of its profits from the 2023 fiscal year, which ended October 2nd, have been reinvested into employee initiatives.
This has included wage increases, training programs, and new equipment for stores. Starbucks says these investments have led to lower turnover, better customer satisfaction, and a nearly 50% increase in total hourly cash compensation since FY 2020.
Economic Concerns Lead Other Chains to Cut Costs, Jobs
Unlike Starbucks’ move to boost pay, other restaurant chains have been cutting costs and jobs amid concerns over a potential recession.
Chipotle Mexican Grill announced last week that it is laying off some staff members as it looks to use technology to make operations more efficient. McDonald’s also recently said it plans to reduce “non-staff-related” costs.
Starbucks Remains Confident Despite Slowing Sales Growth
While Starbucks’ same-store sales grew by 7% globally in its latest quarter, that was the slowest growth rate since December 2021, suggesting demand may be cooling.
However, the company said it remains confident in its growth plans, which include opening 2,000 net new stores in the U.S. by 2025. Starbucks also continues to see strong customer demand for its cold beverages and seasonal specialty drinks.
As macroeconomic uncertainty persists, Starbucks appears to be betting that investing in its workforce will pay off in the form of better customer experiences, employee retention, and brand reputation. The wage increases set the stage for what looks to be a transformative year for the company in 2023.