Starbucks Corporation (SBUX, Financial) had recently launched the “Race Together” campaign and it seems that it is drawing criticism so early. Beginning of this week CEO Howard Schultz had instructed Starbuck's employees to scroll the words “#RaceTogether” on the coffee cups. It was an attempt to get different views of Americans on the topic of diversity. However, people are exhibiting a negative feedback towards the campaign as no one would want to engage in a race conversation early in the day while having coffee.
#RaceTogether
The issue has been blown out of proportion knowing no bounds. Angered customers resorted to attacking the company online. So much so Corey duBrowa, Senior VP of the global communications division, had to delete his Twitter (TWTR) account. He said that he deleted his Twitter account as he felt he was being attacked in a cascade of negativity. Schultz however, said that America should be open to talking about racial issues. The main reason for starting this campaign was to bring out answers about the topic, not to stay silent. He however, said that this kind of backlash is naive and does not deserve any criticism. The campaign isn't any marketing gimmick, he said, rather it will solve the racial problems that have been rampant since centuries. Though workers can write on the cups, he said that isn't compulsory. Besides. Starbucks would offer their customers another cover up cups if consumers didn't favor the message. Maybe, but maybe not. Some people do beg to differ in their opinions, Mr. Schultz. The company earned $915.5 million operating income for the fourth quarter ended 28th December 2014 as compared to $813.5 million same quarter, last year.. Revenue also showed an upward trend with a 13% increase, amounting to $4.8 billion.
Birth of the Idea
The entire racial topic got its origin when the CEO held a meeting to discuss racial discrimination. Various other events held last year in California, Ferguson, etc. had the topic of racial tension discussed. Schultz then decided to hold more meetings with the same agenda in LA, NY, Chicago and Oakland. It seems that he has taken political issues way too seriously. In 2013, Mr. Schultz had urged the Congress to pass a budget deal. He also released a book “For Love of Country,” talking about military and veterans. However, his latest endeavor has not gone down too well. The kind of feedback received has been too brutal. The company has been criticized since most of the management are whites, but Starbucks employees are minorities. Public at large have even made video parodies of consumer interaction with employees. If Starbucks has to ever launch another campaign on a sensitive issue, it will surely think twice. Or maybe thrice. A good thing is that the coffee giant is taking issues in highlighting social issues. However, doing it at the cost of innocent customers who are just waiting for their coffee, does not seem to be a fair deal. CMO of Procter & Gamble Company (PG, Financial), Jim Stengel said that the difference here is the invasion of consumer's privacy. Consumers would rather wait silently for their coffee and then leave, he said. If the company's main aim was to garner attention, it has achieved it, but for all the wrong reasons.
Investor Take
Shareholders of the company have shown mixed reactions to the issue. Steve Nussbaum, one of the company's shareholders said that one terrific thing about the company is that they are promoting social issues. Since Starbucks is a forward moving company, whatever Howard puts will work, he says. However, some investors seem to be happy with the company's social efforts, some are upset. Investor Mary Melalson said that she is not sure how employees will have the time to engage consumers in a conversation. The situation at hand has really gone for a toss with consumers even walking out of stores if baristas would approach them with such sensitive topics. Given such a state, investors can only wait to see the effect of such an issue on their share value. Starbucks shares closed 1.5% at $95.84. Investors will receive one share for every share they have as of 30th March. New shares will be payable on 8th April and trading of these shares will be done on a split-trading basis the day after 8th April.
