Starbucks will give all salaried employees in North America a 2% raise this year, a shift from previous increases that were decided at managers’ discretion.
It’s part of a turnaround effort that includes better service, shorter wait times and more inviting stores. The company has asked executives to keep costs under control to help pay for these upgrades.
Customers say they “can see and feel the differences these investments are making,” according to a Starbucks spokesperson. “As we make these significant investments, we need to carefully manage all our other costs.”
That involves “taking a consistent approach to merit increases across all teams” for the fiscal year that ends in late September, according to Starbucks. The 2% raise applies to all corporate staff, as well as to workers in manufacturing and distribution. It also includes retail leadership such as store managers who, unlike baristas, are salaried.
Starbucks is working to reverse six quarters of same-store sales declines. In addition to making cafes more welcoming, CEO Brian Niccol has begun work to refresh the menu, add more staff to stores and roll out technology to streamline orders.
Niccol has so far implemented a raft of workforce changes, from tightening the dress code for baristas to laying off 1,100 corporate workers and requiring some to relocate to Seattle. Starbucks has also granted some executives stock grants with a $6 million target value each, which are payable if they keep a lid on costs while delivering on the turnaround as quickly as possible.
Starbucks is expected to post a slight increase in comparable-store sales, which measures performance at locations open at least 13 months, in its current quarter, according to the average estimate of analysts polled by Bloomberg.
In Starbucks’ previous fiscal year, corporate workers only received 60% of their bonuses due to the company’s poor financial performance.