Starbucks and its CEO Howard Schultz are known well for wading in to divisive political issues and in support for liberal candidates like Hillary Clinton, yet it never seems to cost them significantly in either sales or stock price.
Even when Schultz told shareholders to sell if they don’t agree with corporation stances on issues like gay marriage, customers and investors have largely stuck around.
That trend likely won’t change after the latest controversial stance that Schultz took, utilizing the policies of the company he leads (until early April, when he steps down) to advance his political goals. But some cracks are showing with this one.
Last month Schultz announced the company would hire 10,000 refugees in its stores around the world, after President Trump’s executive order that temporarily prohibited visits from citizens of seven nations that showed a heightened terror threat to the United States. Schultz didn’t like that, and characterized the move as discriminatory.
“I am hearing the alarm you all are sounding,” Schultz wrote to Starbucks employees after Trump’s order, “that the civility and human rights we have all taken for granted for so long are under attack, and want to use a faster, more immediate form of communication to engage with you on matters that concern us all as partners.”
He added, “We are living in an unprecedented time, one in which we are witness to the conscience of our country, and the promise of the American Dream, being called into question.”
Schultz’s intentions were immediately met with opposition via a #BoycottStarbucks social media campaign. Among the Tweets:
And…
Now, nearly a month after Schultz’s memo and announcement, measurements of his customers’ perspectives are coming in. According to YouGov BrandIndex, which “continuously measures public perception of thousands of brands across dozens of sectors,” Starbucks has seen its reputation diminish by two-thirds. Business Insider reported:
“The perception tracker measures if respondents have ‘heard anything about the brand in the last two weeks, through advertising, news or word of mouth, was it positive or negative.’ In Starbucks’ case, perception is still overall positive, but significantly lower than it was prior to CEO Howard Schultz published a public letter outlining the company’s plans to give refugees jobs.”
As one measurement example, according to YouGov, when asked two days before Schultz’s announcement whether they’d consider Starbucks next time they had a coffee craving, 30 percent of consumers said they would. The response was the best for the company since March 2016. But today the favorability rating is down to 24 percent, which is where the company’s reputation stood in August last year.
Measured another way, Starbucks’ “consumer perception score” was 11 when Schultz announced the refugee plans, meaning 11 percent more people viewed the company positively as opposed to negatively. This week that score fell to four. But according to BuzzFeed.com, Starbucks suffered a similar drop in its perception score in May 2016, but still experienced a 4 percent increase in U.S. sales during the same period.
“Some boycotts can deliver on their purpose, so you can never underestimate them,” said a YouGov BrandIndex spokesperson to BuzzFeed. “It is possible that Starbucks may feel this at their next earnings call. The big question is will they stick to their guns or not?”
History says Schultz – who will remain chairman but leave his CEO position – won’t shy away from wielding his corporate influence to affect progressive “social justice” causes. For example, back in 2010 he joined an effort with several companies to pressure President Obama to lead the U.S. in the creation of a Global Climate Fund — a massive wealth transfer from developed countries to developing countries.
Similarly, in late 2014 Starbucks signed on to a joint corporate plea to the president in support of EPA’s controversial proposed standard for existing power plants to limit carbon dioxide emissions, which would dramatically increase the cost of electricity for Americans.
And then last year Schultz and dozens of company CEOs signed a message to then-North Carolina Gov. Pat McCrory lecturing the state about its legislation that required persons to use public and business restrooms and changing facilities according to their gender on their birth certificate – the so-called “transgender bathroom law.”
This followed Schultz’s support of legalized homosexual marriage years earlier, and then subsequently told shareholder Tom Strobhar to sell his stock if he disagreed with the company’s stance.
As National Legal and Policy Center President Peter Flaherty wrote at the time:
“As a corporate executive, does [Schultz] really have the right to obligate everyone else at the company to his beliefs?
“If Starbucks as a company now formally supports gay marriage and is committing corporate resources to the fight, does this not create a dilemma for many employees? Presumably, the mission of every employee is to sell more coffee and build the company. So every employee is forced to support gay marriage every day they go to work.”
So also is the case with a host of other issues. With the immigration and refugees issues, any Starbucks employee who supports President Trump’s efforts to keep America secure, safe, and well employed likely feels alienated by their employer. But that won’t stop ideologue CEO Schultz.
Paul Chesser is an associate fellow for the National Legal and Policy Center.