Starbucks’ barista strike could undermine its turnaround plan

Starbucks has been working hard to bring back customers, promising faster service and a return its coffeehouse roots, with ceramic mugs and hand-written notes.

But though sales show signs of perking up, the company is still wrestling with a years-long labour fight that threatens to hamper its turnaround.

Picket lines could greet customers collecting their morning latte at some US stores on Thursday, as the company faces another strike by unionised baristas, calling for better pay and increased staffing.

The walkout, expected to affect stores in at least 25 cities, is the third major strike to hit the company in the US since the union, Starbucks Workers United, launched four years ago.

Baristas and their union say the new turnaround policies, have only added to their workload.

“Every single day at this company, as of recently, has been very, very difficult to be a barista,” said Michelle Eisen, a spokesperson for the union, which says it represents workers at more than 600 stores in the US.

“You should not be evolving to the point of running your workers to the ground,” said Eisen, who worked as a barista for 15 years before leaving Starbucks this May.

Starbucks says it does not expect the strike to disrupt operations at the “vast majority” of its more than 10,000 company-operated stores in the US.

But the action, timed to coincide with Starbucks’ Red Cup day, a major holiday sales event, risks returning unwanted scrutiny to the company at a delicate moment.

In recent years the brand has faced consumer boycotts, a wave of new competitors and a customer backlash over high prices, as well as turmoil in its leadership ranks.

The arrival last year of new chief executive Brian Niccol, a veteran of successful turnarounds at Chipotle and Taco Bell, raised hopes he could do the same for Starbucks. Investors sent the chain’s shares up 24%.

He quickly embarked on changes, part of what he called his “Back to Starbucks” strategy. He banned non-customers from bathrooms, enforced a stricter dress code for staff and re-introduced comfy seating that he said would help restore the chain’s appeal.

At the same time, Starbucks has outlined plans to invest more than $500m to improve coffeehouse staffing and training.

Progress has been slow. Last month, Starbucks reported 1% growth in sales at global stores open at least one year – its first quarterly increase in almost two years. But in the US, sales were flat.

“We have more work to do, but we’re building momentum,” Mr Niccol said on a recent call with analysts.

But the new strategy has been accompanied by hundreds of store closures, thousands of layoffs and the sale of a 60% stake in its China business, and labour tensions have continued to fester.

Starbucks Workers United leaders say relations improved last year, but that contract discussions stalled when Mr Niccol – who was in charge of Chipotle when it faced complaints of labour rights violations – took the helm of the company last September.

Even after the two sides agreed to bring in a mediator in January, they remained at odds over pay, staffing and hundreds of unresolved charges of unfair labour practice.

A union spokesperson said Starbucks has offered no pay raises in the first year of a contract, then 2% in the years following, which he said fails to account for inflation and the cost of healthcare. Baristas overwhelmingly voted down the contract offer in April.

The company, on the other hand, blames the union for stalled talks. The union’s demands for pay increases would “significantly affect store operations and customer experience”, Sara Kelly, the company’s chief partner officer, said in a statement last week.

“When they’re ready to come back, we’re ready to talk,” Jaci Anderson, a spokesperson for Starbucks, said in a statement.

“Any agreement needs to reflect the reality that Starbucks already offers the best job in retail,” she added, pointing to low staff turnover rates, and pay and benefits, that the company says add up to an average hourly wage of $30.

Unionised coffeeshops account for only about 5% of all Starbucks stores that are directly owned by the corporation in the US, but union organisers say they have added roughly 100 more stores over the last 12 months.

This continued stand-off could pose both an operational and a reputational risk for the firm, say analysts.

The brand had already shown signs of being under pressure, said Laurence Newell, managing director in the Americas for Brand Finance, a consultancy that tracks brand strength. Starbucks fell to 45th place in its 2025 annual ranking – its lowest level since 2016 – driven in part by a decline in its reputation among customers.

“Happy customers have to come from happy employees,” said Stephan Meier, a professor of business strategy at Columbia Business School. “You can’t do that top down.”

This week, more than 80 Democrats in the House and Senate sent letters to Mr Niccol, accusing Starbucks of “union-busting” and urging the company to bargain in good faith.

Joe Pine, management adviser and co-author of the “Experience Economy”, said Mr Niccol had a lot on his plate, but he was “surprised” that he had allowed the issue to remain unresolved.

“This would seem to be one of the first things you need to do: you need to have your people on board,” he said.