It is the end of an era at Starbucks

Howard Schultz didn’t start Starbucks, but he built it into the company it is today.

Howard Schultz officially stepped down as chief executive of Starbucks Corp. in March 2023. But with Schultz, you’re never really sure that he’s gone.

Twice before the longtime CEO has handed over the reins to a hand-picked successor. And twice before he boomeranged back into the CEO job, claiming he had returned to right a company that had lost its way.

But this week, we got the surest sign yet that the Schultz era at Starbucks is officially over. The company and the union representing its employees said they had agreed to start discussions about how to reach collective bargaining agreements. It’s the first real indication of any sort of thaw between the two parties, which have been locked in a bitter battle over workers’ efforts to organise.

These initial steps toward an agreement were unlikely to ever have happened with Schultz in charge. He’d been adamantly opposed to a union at Starbucks; in fact, the labour organising at the company was one of the factors that precipitated his 2022 return.

Things had gotten nasty. Last year, Schultz testified in a Senate committee meeting about the company’s alleged labour law violations, prompting Vermont Senator Bernie Sanders to describe Starbucks as waging “the most aggressive and illegal union busting campaign in the modern history of our country.” Schultz said repeatedly during the hearing that the company had not broken the law.

Seeing the company used as a proxy for union busting and corporate greed was a sharp turn for Starbucks, which has long been a favourite of latte-loving liberals. But Schultz’s position on the union always seemed very much at odds with the kind of company he had tried to build — one with progressive benefits and progressive stances. The company was one of the first corporate giants to take a stand on social issues like gun control and Black Lives Matter.

Schultz didn’t start Starbucks, but he built it into the company it is today. And in him, we saw how the best and worst parts of founders and longtime CEOs are often one in the same: Everything is personal for them. They inject a company with passion and dedication, but that also can mean they make decisions using emotion rather than reason. It’s understandable, having created a company in which its every failure and success is tied to their own identity. In Schultz’s case, he always said he tried to make Starbucks the kind of employer his father, who had been fired after injuring himself on the job as a delivery driver, never got the chance to work for.

So for Schultz, the arrival of the union was deeply personal. He believed that only badly behaved companies needed unions to protect their workers; in his mind, Starbucks was not that kind of a company, and he was not that kind of a CEO.

When I wrote about the hearing last year, Wilma Liebman, a chairman of the National Labor Relations Board during the Obama administration, told me that Schultz was exhibiting the “reflexive anti-unionism” often seen among company founders. Because it’s a group that tends to take worker activism so personally, it makes them more prone to anti-union behaviour. “It’s a huge disappointment,” she said of Starbucks.

The coffee giant, however, has reached a point where CEO Laxman Narasimhan can no longer afford to uphold his predecessor’s position on the union. When Starbucks reported earnings earlier this month, posting its slowest sales growth in a year, analysts in part blamed the impact of consumer boycotts over the war in Gaza and the company’s prolonged fight against the union.

Perhaps most worrisome, Starbucks had put itself at risk of losing its future customer base. Gen-Z has been called the “most pro-union generation” and has shown a willingness to make sure its spending aligns with its values in a way we don’t see with other cohorts. Last week, for example, actions were planned at 25 college and universities by students who want Starbucks kicked off their campuses for its alleged anti-union activities.

Schultz built Starbucks into the coffeehouse behemoth it is today by not only keeping up with the cultural moment but by informing it, selling not just coffee but also a set of values. His stance on unions — which now have historic levels of support in this country — was a sign that he had fallen out of step. It seems to have taken an outsider to realise that moving forward with the union isn't a personal failing but rather a good business decision.

Beth Kowitt is a Bloomberg Opinion columnist. Views do not represent the stand of this publication. 

Credit: Bloomberg