- Restaurant chains from McDonald’s to IHOP are struggling to fill jobs as the economy reopens.
- Starbucks CEO Kevin Johnson said retention is good because of its industry-leading benefits.
- During the pandemic, Starbucks increased wages and expanded backup childcare perks.
- See more stories on Insider’s business page.
Restaurant chains are facing hiring challenges as dine-in traffic returns to pre-pandemic levels in various parts of the country.
And in order to field more delivery driver, cook, cashier, and server applications, restaurants are getting creative. A Florida McDonald’s is forking over $50 to get people to show up for job interviews. Morton’s The Steakhouse, owned by Texas billionaire Tilman Fertitta, is offering a $250 sign-on bonus. Meanwhile, Taco Bell is luring prospective applicants by throwing hiring parties at stores and IHOP is hosting a “National Recruiting Day” to fill some 10,000 positions.
At Starbucks, gimmicks and cash teasers are not needed.
CEO Kevin Johnson told investors and analysts on the company’s second-quarter earnings call Tuesday that Starbucks’ investments made over the years in employee benefits are paying off for the chain.
“Unlike what I’ve read about from other companies, our retention numbers are good,” Johnson said during the conference call.
Johnson said “energy and spirits” are high among employees thanks, in part, to specific pandemic-related benefits that Starbucks rolled out last year. This included increasing hourly pay for employees by 10%. The wage increase came as union advocacy groups and some legislators proposed raising the federal minimum wage to $15 an hour.
At the time, Johnson pledged to keep higher wages top-of-mind.
“With these investments, more than 30 percent of our US retail partners are currently at or above $15/hour and we continue on our path to ensure all US partners will be making at or above $15/hour within the coming two to three years,” he wrote in a letter to Congress in December 2020.
Still, not every Starbucks store appears to be immune to ongoing labor shortages, according to industry analyst Roger Lipton.
“Even for the companies with the best employee ‘culture’, it is very difficult to deliver the bodies to the right positions at meal periods,” Lipton wrote this week.
Even though Starbucks “wrote the book” in terms of employee culture, Lipton added he found labor issues at a local Starbucks near his office, which closed a couple of times due to staffing shortages in recent weeks.
Starbucks’ long history of leading on employee perks
In the late 1980s, then-Starbucks CEO Howard Schultz extended healthcare coverage to part-time employees and ensured that it included domestic partners.
At the time, giving benefits to part-timers was groundbreaking. And eventually, other companies followed Starbucks’ lead.
Under Ron Crawford, the company’s current vice president of global benefits, Starbucks continues to shape its progressive benefits to include more groundbreaking perks including the Starbucks College Achievement Plan, which offers full tuition coverage. Nearly 6,000 employees have graduated with an online degree from Arizona State University since the program launched in 2014.
Crawford told Insider in a previous interview that Starbucks looks to develop transformative benefits – perks that change “someone’s life for the better.”
That was especially crucial during the COVID-19 crisis, which forced many businesses to close, lay off workers, and file for bankruptcy.
Early on in the pandemic, Crawford saw a need for expanding mental healthcare benefits as working in the field or remotely from home became stressful for all workforces. In April 2020, Starbucks employees in the US, and some family members, became eligible for 20 free sessions a year with a mental healthcare professional.
Starbucks also expanded its “backup care days” from 20 to 30 days, where partners pay $1 an hour for backup child or adult care. That was especially relevant during the pandemic when many families faced school and childcare facility closures.
When vaccines became available to essential restaurant workers earlier this year, the company provided employees who received a COVID-19 vaccine a total of two hours of paid time off for each dose.
On Tuesday, Johnson said improved benefits and wages implemented by the company during the pandemic have been applauded by employees, which is why the chain is not experiencing a labor shortage in its stores and cafes.
“We paid our partners whether they came to work or stayed home. We increased the benefits that we gave them for COVID-related health benefits,” he said. “We took care of our partners through this pandemic. And as a result, our partners have risen to the occasion.”