Wednesday, 5 December 2012

Starbucks. Are we seeing the death of a brand?




Starbucks is really beginning to lose its gloss as a brand. And it's their own fault.

Under scrutiny recently about paying low tax (alongside Google, Amazon et al) it made a publicity moment by saying that it was prepared to enter talks with the UK Government in order to actually pay more tax. Good move...perhaps.

They've paid relatively little UK tax and route their profits to that transparent tax country, Switzerland.  Clever maybe, immoral definitely, but from a brand perspective....disaster.

At the same time, on almost the same day, it started a process to reduce staff benefits and by implication, is getting its staff to pay the increased tax. Faced with massive protests this Saturday by UK Uncut (http://www.ukuncut.org.uk/), it paid 8.6 million in tax over 14 years on sales of over 3 billion. Its tax practices have been branded "immoral" by The House of Commons's Public Accounts committee.

Starbucks has now decided to cut the lunch breaks of its 7,000 staff, sick leave and maternity benefits. It has also removed managers cash incentives (they now get a plaque instead - Yippee!) and workers have to sign their new employment agreement. In a real mealy-mouthed way it has done away with giving new mums on its staff a hamper and instead they get, a card with a Starbucks bib (!). I'm sure they're thrilled! Congratulation and Birthday staff cards are gone too. I'm not kidding you.

Starbucks say the two matters - tax and employee benefits - are totally unrelated, although they told staff not to discuss the new terms. But those staff are of course Social Media savvy and strong Bloggers so they've unleashed an insider Social Media army against themselves.

If you're in any doubt, you'll find them here, courtesy of The Guardian.
http://www.guardian.co.uk/business/interactive/2012/dec/03/starbucks-uk-employees-new-contracts?intcmp=239

Started in Seattle 1971, it is the largest coffeehouse in the world, present in 61 countries. 


This was a brand that had everything.
Innovation, coolness, music, store hipness and in a matter of weeks is in danger of losing it all.

The tax issue may claim more big brands, yet.