Coffee chain giant Starbucks (SBUX) has been having labor troubles for a long time now. With some stores moving to become union shops, just getting agreements set up is proving a problem. Now, Starbucks is turning to a mediator, reports note, and the move is not sitting well with investors. Starbucks shares are down fractionally in Friday afternoon’s trading.
Invest with Confidence:
- Follow TipRanks' Top Wall Street Analysts to uncover their success rate and average return.
- Join thousands of data-driven investors – Build your Smart Portfolio for personalized insights.
With contract negotiations between the union and Starbucks largely stalled—the last word about talks said that they had largely been halted back in December after nine months of bargaining—the mediator will be coming in to hopefully close the gap. The union already led one five-day strike just weeks ago, reports noted, and has so far filed over 90 separate reports of unfair labor practices.
Throw in the fact that Starbucks was also closing locations in several places—Chicago, Los Angeles and Seattle locations all faced closure at one point—and it seems like Starbucks was hoping to wait out the union’s demands. That does not seem to have been an effective strategy, so Starbucks is going back to the mediator plan to hopefully get them somewhere.
An Easier Job
But Starbucks may be offering an unexpected benefit to its barista staff: an easier menu to work with. In fact, Starbucks is looking to pare back about a third of its menu, reports note, as the current one is too “complex” to be easily worked with.
It is one of the key plans of new CEO Brian Niccol, who noted it was time for Starbucks to “clear the noise out both in food and beverage menus.” Further, Niccol looks to get digital menus more involved in company-owned stores, which would facilitate the menu changes, and offer a more readily-available look at customization options.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 15 Buy, five Hold and three Sells recommendations assigned in the past three months, as indicated by the graphic below. After a 19.69% rally in its share price over the past year, the average SBUX price target of $107.91 per share implies 0.78% downside risk.
