Starbucks: founder sees lots of room to grow, but will it pay managers fairly?

A New York Times article has an interview with Howard Schultz, chairman and founder. He believes the company has lots of room to grow (mainly outside the US), even though there's already a Starbucks on every corner in major US cities (and in Singapore too).

Schultz also talks a bit about sourcing coffee, and the need to reform health care.

Q. What about ensuring sourcing as you grow? I was in coffee-growing regions of Chiapas in April and Starbucks there is working with a middleman because the demand is so large. Starbucks itself seemed to be very distant to the farmers, even though you emphasize those relationships.

A. Let me try to go from 30,000 feet down as it relates to supply and the issue of arabica and what’s going on around the world. First off, I think pricing over the near term will be fairly stable unless there’s some weather catastrophe or something unprecedented.

We have traveled on average about 300 days a year in the last five years for the sole purpose of ensuring sustainability and long-term relationships with existing suppliers, and then doing the kind of work that would uncover new sources of high-quality arabica in existing and new markets.

I believe that we have established a competitive advantage in the marketplace that is not only sustainable but will differentiate us because there won’t be enough of that high-quality coffee to go around.

Q. And that advantage is your relationship with the growers?

A. One of the things that I’ve learned over the years is that everyone is willing to pay a high price for high-quality coffee when the market is high. Very few if any — other than us — are willing to pay a premium when the market goes down.

Q. You have been on the record about the need to reform health care. What role do you want to play between now and the November elections?

A. Over the last couple of years, I’ve been back and forth to Washington, more times than I would like to remember, sometimes alone and often with other C.E.O.’s. The primary hope was to get health care reform on the Congressional agenda. It’s still not on the Congressional agenda. We’re spending $1.5 billion or so on the Iraq war and we can’t solve the health care problem in America.

Given that people are willing to pay a premium for premium coffee, Christians should hope that coffee growers will get premium prices, which will improve their standard of living. After all, Deuteronomy 24:14 says "You shall not withhold the wages of poor and needy laborers." And trust me, coffee growers are poor. If the Bible wasn't enough, Article 23 part 3 of the Universal Declaration of Human Rights says:

(3) Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.

Now, speaking of favorable (the UN text is written in British English, btw) remuneration, several Starbucks managers are engaged in a class action suit that has just been certified in Florida against Starbucks. As managers, they cannot be paid overtime by US law; that particular law is a big point of controversy. The Starbucks managers allege that their duties are substantially identical to the workers they supervise, that they end up working overtime, and that they forego compensation for that overtime. A competitor, Caribou Coffee, is facing a similar class action lawsuit in Minnesota. Perhaps US law, more than Starbucks, is to blame in this particular case.

However, perhaps Howard Schultz should be made to write 100 times on the blackboard, "I will not engage in union busting, and I will pay fair wages to all employees."