(Bloomberg) -- Many Starbucks Corp. corporate workers are only getting 60% of their overall bonuses for the company’s most recent fiscal year due to the chain’s poor financial performance, according to a person familiar with the matter.
The company’s weaker-than-expected financial results for the fiscal year that ended Sept. 29 are dragging down the overall payout for many workers who met their personal goals, this person said, who was unauthorized to speak publicly on the matter.
Most employees’ bonuses are calculated evenly based on individual performance and business results, a separate document seen by Bloomberg News shows.
Bonuses are normally paid in December. The portion that is based on company performance is calculated from revenue and operating income, the document shows. Starbucks revenue grew less than 1% in the most recent fiscal year, compared with double-digit increases in the prior three years. Consolidated operating income fell about 8%.
The shrunken bonuses embody the sales woes that Starbucks has experienced this year as customers dinged by widespread inflation cut back on their lattes. Many visitors have also complained about long wait times and inaccurate orders. Additionally, like many big US brands, the coffee giant has taken a hit from boycotts over its perceived stance on the war in the Middle East.
Same-store sales fell in the latest fiscal year for only the second time in the last 15, with the other being in 2020 when Covid-19 restrictions kept diners at home. New Chief Executive Officer Brian Niccol is trying to reverse the slump, pledging to make cafes more welcoming, speed up service and better equip workers to do their jobs.
“It is clear we need to fundamentally change our strategy to win back customers,” Niccol said on the company’s fourth-quarter earnings call. “We have a clear plan and are moving quickly to return Starbucks to growth.”
Starbucks referred Bloomberg to Niccol’s remarks and declined to comment further.
In the US, the bonus targets range from 5% of base pay for rank-and-file workers to 45% of base pay for senior vice presidents, according to the document. Business performance has a bigger influence on the payout for SVPs and above, meaning that their bonuses will take a bigger hit.
Senior and executive management won’t get merit raises, unlike workers in other positions, according to a person familiar with the matter.
Starbucks shares have risen about 6% this year through Monday’s close, compared with an almost 26% increase for the S&P 500 Index.
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