Starbucks will overhaul its incentive program for baristas at company-operated U.S. stores starting in July, the Wall Street Journal reported Monday.
The changes center on two key measures. First, the company expanded tipping options. Previously, tips were only available through in-store payments, drive-through orders and the Starbucks app. Going forward, customers will also be able to tip when placing mobile orders with regular credit or debit cards. Second, Starbucks created a new quarterly performance bonus. Employees and managers at stores that meet targets for sales, operational efficiency and customer satisfaction will receive $300 per quarter — up to $1,200 per year.
The company said the measures would effectively raise total barista compensation by 5% to 8%. Starbucks baristas currently earn an average of about $30 per hour including benefits.
The announcement is notable given that it came ahead of formal collective bargaining negotiations. Starbucks Workers United, which represents about 600 U.S. stores, has been pressing the company for wage increases and additional staffing. The union pushed back against the new plan, saying the additional compensation "depends on customer behavior or management discretion." It argued that a collective bargaining agreement codifying wages and working conditions should come first.
Meanwhile, Starbucks is carrying out a major restructuring amid sluggish earnings. The company closed 520 U.S. locations in the fourth quarter of last year alone, bringing its domestic store count down to 16,864. CEO Brian Niccol has been shutting down unprofitable stores and those failing to meet customer experience standards, while pursuing a "back to Starbucks" strategy that includes remodeling roughly 1,000 locations and cutting the menu by 30%.