Starbucks union negotiations set to resume

When Starbucks and its baristas union resume contract bargaining this week, workers may have renewed momentum at their backs — courtesy of the company’s own CEO.

The coffee giant last month found itself reporting an objectively challenging quarter. U.S. same-store sales fell 3% and traffic dropped 7%. As a result, the company cut its 2024 forecast.

CEO Laxman Narasimhan admitted Starbucks was seeing a more cautious consumer when it came to spending, but also mentioned the need to make improvements to stores as the company saw troubling trends. Starbucks reported rates of incomplete mobile app orders in the mid-teens and said occasional customers came in less.

Narasimhan, in prepared remarks to Wall Street analysts, cited some of the challenges that union workers have been highlighting in their bid for better working conditions.

“Specifically in our U.S. stores, we’re focused on creating a more stable environment for partners through investments in equipment innovation, process improvements, staffing, scheduling and waste reduction, all things our partners value and prioritize creating a more satisfying work environment in our stores while de-risking our business,” Narasimhan said on a call with analysts.

He added in an interview with CNBC’s “Squawk on the Street” that throughput has improved, and said the company’s action plan will continue to build on that momentum with improvements to stores and better communication of value.

“We have improved speed of service quarter over quarter. If you look at the processes that we are rolling out, particularly around peak, what we are finding is that we have opportunities to improve that even further with changes in processes and tools that we provide to partners at peak,” Narasimhan said.

For Workers United, the union behind the Starbucks organizing, his admission that more could be done was promising.

The organizing efforts began nearly three years ago in Buffalo, New York, under then-CEO Kevin Johnson. At the time, Starbucks was a company long known for progressive benefits for workers.

But baristas, emboldened by the experience they had during the Covid-19 pandemic, pushed for changes in the company’s cafes. More than 430 unionized stores and two chief executives later, the two sides have made “significant progress” in contract bargaining, striking a more optimistic tone after a successful two-day session last month.

Starbucks and the union are meeting to continue working on the framework that will inform every single-store contract moving ahead.

“I do believe that we are seeing the company at this point acknowledge that there are issues, significant issues,” Michelle Eisen, a Workers United delegate and original member of the company’s first organized union in Buffalo, told CNBC ahead of negotiations.

“We heard Narasimhan make that statement after the earnings call that…