Starbucks has announced a 2% salary increase for all its corporate and salaried employees in North America, marking a notable shift in its compensation approach as the coffee giant works to reverse declining sales and execute a company-wide turnaround.
Unlike previous years, where raises were decided at managers’ discretion, this increase will be applied uniformly across salaried staff in corporate offices, manufacturing, distribution, and retail leadership positions, including store managers. Hourly baristas are not covered under this raise.
Balancing Pay with Cost Discipline
The decision comes as part of a broader strategy to improve customer experience through better service, faster order fulfillment, and more welcoming stores, while simultaneously keeping costs in check. Executives have been tasked with tightly managing spending to help fund these operational improvements.
CEO Brian Niccol, who joined earlier this year, has already introduced multiple changes — including trimming sugar from menu items, adding more staff to cafes, and leveraging new technologies to streamline ordering. Former CEO Howard Schultz has also been brought back to engage directly with employees and reinforce the company’s vision during this transitional period.
To align incentives, Starbucks has also offered senior executives stock grants tied to delivering on the turnaround while maintaining cost discipline.
Navigating Declining Sales
The pay increase comes against the backdrop of six consecutive quarters of same-store sales declines. Analysts expect a slight rebound in the current quarter, though performance still trails market benchmarks. In the previous fiscal year, corporate employees received only 60% of their bonuses due to underperformance, while barista raises were capped at lower levels than in earlier years.
Niccol’s leadership has already led to workforce restructuring, including layoffs of 1,100 corporate employees and the relocation of some roles to the company’s Seattle headquarters.
Market Context
Starbucks’ share price has gained just 1.4% this year, lagging behind the S&P 500 Index’s 9.7% rise. The company’s uniform pay adjustment, while modest, signals a shift toward internal consistency as it balances investment in staff and operations with the pressure to restore growth.
Starbucks’ move to provide a universal raise underscores its effort to stabilize employee morale while pursuing an ambitious turnaround. The company is betting that operational improvements, coupled with consistent cost management, can help it return to growth and strengthen its competitive position in the highly contested coffee market.
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