Controversy of starbucks

Starbucks has been accused of selling unhealthy products. Market strategy: Some of the methods Starbucks has used to expand and maintain their dominant market position, including buying out competitors' leases, intentionally operating at a loss, and clustering several locations in a small geographical area (i.e., saturating the market), have been labeled anti-competitive by critics. For example, Starbucks fueled its initial expansion into the UK market with a buyout of Seattle Coffee Company, but then used its capital and influence to obtain prime locations, some of which operated at a financial loss. Critics claimed this was an unfair attempt to drive out small, independent competitors, who could not afford to pay inflated prices for premium real estate. While relations with independent coffeehouse chains have been strained, some owners have credited Starbucks with educating customers on coffee. Labor disputes: Starbucks workers in seven stores have joined the Industrial Workers of the World (IWW) as the Starbucks Workers Union since 2004. According to a Starbucks Union press release, since then the union membership has begun expanding to Chicago and Maryland in addition to New York City, where the movement originated. On March 7, 2006, the IWW and Starbucks agreed to a National Labor Relations Board settlement in which three Starbucks workers were granted almost US$2,000 in back wages and two fired employees were offered reinstatement. According to the Starbucks Union, on November 24, 2006, IWW members picketed Starbucks locations in more than 50 cities around the world in countries including Australia, Canada, Germany, and the UK, as well as U.S. cities including New York, Chicago, Minneapolis and San Francisco, to protest the firing of five Starbucks Workers Union organizers by Starbucks and to demand their reinstatement. Some Starbucks baristas in Canada, Australia and New Zealand, and the United States belong to a variety of unions. In 2005, Starbucks paid out US$165,000 to eight employees at its Kent, Washington, roasting plant to settle charges that they had been retaliated against for being pro-union. At the time, the plant workers were represented by the International Union of Operating Engineers. Starbucks admitted no wrongdoing in the settlement. A Starbucks strike occurred in Auckland, New Zealand, on November 23, 2005. Organized by Unite Union, workers sought secure hours, a minimum wage of NZ$12 an hour, and the abolition of youth rates. The company settled with the Union in 2006, resulting in pay increases, increased security of hours, and an improvement in youth rates. In March 2008, Starbucks was ordered to pay baristas over US$100 million in back tips in a Californian class action lawsuit launched by baristas alleging that granting shift-supervisors a portion of tips violates state labor laws. The company plans to appeal. Similarly, an 18-year-old barista in Chestnut Hill, MA has filed another suit with regards to the tipping policy. Massachusetts law also states that managers may not get a cut of tips. A similar lawsuit was also filed in Minnesota on March 27, 2008. "War On Christmas": In November 2015, the coffee shop chain Starbucks introduced solid red seasonal cups, unlike previous seasonal iterations that were decorated with winter or Christmas-oriented imagery (such as reindeer and ornaments), but no overtly religious symbols. The cup design was discussed extensively on social media, with some citing the cup as another example of the "War on Christmas", calling it "cup-gate", and others expressed puzzlement over the outrage generated by a simple cup. Starbucks continued selling a Christmas blend that year as it had in the past. Opening without planning permission: Starbucks has been accused by local authorities of opening several stores in the UK in retail premises, without the planning permission for a change of use to a restaurant. Starbucks has argued that "Under current planning law, there is no official classification of coffee shops. Starbucks therefore encounters the difficult scenario whereby local authorities interpret the guidance in different ways. In some instances, coffee shops operate under A1 permission, some as mixed use A1/A3 and some as A3". In May 2008, a branch of Starbucks was completed on St. James's Street in Kemptown, Brighton, England, despite having been refused permission by the local planning authority, Brighton and Hove City Council, who claimed there were too many coffee shops already present on the street. Starbucks appealed the decision by claiming it was a retail store selling bags of coffee, mugs and sandwiches, gaining a six-month extension, but the council ordered Starbucks to remove all tables and chairs from the premises, to comply with planning regulations for a retail shop. 2500 residents signed a petition against the store, but after a public inquiry in June 2009 a government inspector gave permission for the store to remain. A Starbucks in Hertford won its appeal in April 2009 after being open for over a year without planning permission. Two stores in Edinburgh, one in Manchester, one in Cardiff, one in Pinner and Harrow, were also opened without planning permission. The Pinner cafe, opened in 2007, won an appeal to stay open in 2010. One in Blackheath, Lewisham was also under investigation in 2002 for breach of its licence, operating as a restaurant when it only had a licence for four seats and was limited to take away options. There was a considerable backlash from members of the local community who opposed any large chains opening in what is a conservation area. To this date, the Starbucks is still operating as a takeaway outlet. Protests: There have been calls for boycott of Starbucks stores and products because it has been wrongly claimed that Starbucks sends part of its profits to the Israeli military, but such allegations are based on a hoax letter attributed to the President, Chairman and CEO of Starbucks Howard Schultz, who is Jewish and supports Israel's right to exist. He is a recipient of several Israeli awards including "The Israel 50th Anniversary Tribute Award" for "playing a key role in promoting a close alliance between the United States and Israel". The hoax letter claiming that Schultz had donated money to the Israeli military was actually written by an Australian weblogger, Andrew Winkler, who has admitted fabricating the document. Starbucks responded to these claims, widely circulated on the internet, stating that "Neither Chairman Howard Schultz nor Starbucks fund support the Israeli Army. Starbucks is a non-political organization and does not support individual political causes". The protests against Starbucks derived from the Winkler letter were not the first; earlier protests occurred in June 2002 in Cairo, Dubai and Beirut universities in response to Schultz's criticism of Yasser Arafat. Starbucks has been a regular target of activists protesting against Israel's role in the Gaza War over the claims. Organizations have urged a boycott of Starbucks, accusing Starbucks of serving as an ally of Israeli militarists. Starbucks was forced to close a store in Beirut, Lebanon due to demonstrators shouting anti-Israel slogans and causing customers to flee. Demonstrators hung several banners on the shop's window and used white tape to paste a Star of David over the green-and-white Starbucks sign. They also distributed a letter saying, Schultz "...is one of the pillars of the American Jewish lobby and the owner of the Starbucks," which they said donates money to the Israeli military. On January 2009, two Starbucks stores in London were the target of vandalism by pro-Palestinian demonstrators who broke windows and reportedly ripped out fittings and equipment after clashes with riot police. "The Way I See It": Quotes by artists, writers, scientists and others have appeared on Starbucks cups since 2005 in a campaign called "The Way I See It". Some of the quotes have caused controversy, including one by writer Armistead Maupin and another by Jonathan Wells that linked 'Darwinism' to eugenics, abortion and racism. Disclaimers were added to the cups noting that these views were not necessarily those of Starbucks. US military viral email: A US Marines Sergeant emailed ten of his friends in August 2004 having wrongly been told that Starbucks had stopped supplying the military with coffee donations because the company did not support the Iraq War. The email became viral, being sent to tens of millions of people. Starbucks and the originator sent out a correction, but Starbucks' VP of global communications, Valerie O'Neil, said in September 2009 that the email was still being forwarded to her every few weeks. Gun controversy: As gun laws in many US states have become more relaxed, and more states have adopted open carry or concealed carry statutes, some gun owners have begun carrying guns while performing everyday shopping or other tasks. Many stores and companies have responded by banning the carrying of guns on their premises, as allowed by many states' local laws. Starbucks has not instituted a policy banning guns in their stores. In 2010, the Brady Campaign proposed a boycott of Starbucks due to their gun policy. At that time, Starbucks released a statement saying "We comply with local laws and statutes in all the communities we serve. That means we abide by the laws that permit open carry in 43 U.S. states. Where these laws don't exist, openly carrying weapons in our stores is prohibited. The political, policy and legal debates around these issues belong in the legislatures and courts, not in our stores." In 2012, the National Gun Victims Action Council published an open letter to Starbucks, asking them to revise their policy, and also proposed a "Brew not Bullets" boycott of the chain until the policy is changed, with Valentine's Day selected as a particular day to boycott the chain. In response, gun rights advocates started a counter "Starbucks Appreciation Day" buycott to support Starbucks' stance, and suggested paying for products using two-dollar bills as a sign of Second Amendment support. On July 29, 2013, Moms Demand Action for Gun Sense in America, initiated a petition demanding a ban on guns in Starbucks stores. On September 17, 2013, founder and CEO Howard Schultz asked customers to no longer bring guns into its stores. He made the comments in an open letter on the company's website. Schultz said he was not banning guns, but making a request. Same-sex marriage: In January 2012, a Starbucks executive stated it supports the legalization of same-sex marriage. This resulted in a boycott by the National Organization for Marriage, a political organization that opposes same-sex marriage, who received 22,000 signatures in favor of their boycott. In response, CEO Howard Schultz had this to say: "If you feel, respectfully, that you can get a higher return than the 38 percent you got last year, it's a free country. You can sell your shares of Starbucks and buy shares in another company. Thank you very much." In addition, 640,000 people also signed a petition thanking Starbucks for its support. European tax avoidance: In October 2012, Starbucks faced criticism after a Reuters investigation found that the company reportedly paid only £8.6 million in corporation tax in the UK over 14 years, despite generating over £3 billion in sales—this included no tax payments on £1.3 billion of sales in the three years prior to 2012. It is alleged that Starbucks was able to do this by charging high licencing fees to the UK branch of the business, allowing them to declare a £33 million loss in 2011. The UK subsidiary pays patent fees to the US subsidiary, purchases coffee beans from the Netherlands subsidiary (where corporation tax is lower than in the UK), and uses the Swiss subsidiary for other "miscellaneous services". A YouGov survey suggested that Starbucks' brand image was substantially weakened by the controversy surrounding how much tax it pays in the UK several weeks after the allegations surfaced. Starbucks' chief financial officer (CFO) appeared before the Public Accounts Committee in November 2012 and admitted that the Dutch government granted a special tax rate to their European headquarters, which the UK business pays royalties to. Dutch law permits companies to transfer royalties collected from other countries to tax havens without incurring taxes, unlike in the rest of the EU. The CFO denied that they chose the Netherlands as their European headquarters to avoid tax, explaining that the company's Dutch coffee roasting plant was the reason for the decision. Until 2009, the royalty rate was 6% of UK sales, but after being challenged by UK tax authorities it was reduced to 4.7%. The CFO told the committee this reflected costs such as designing new stores and products, but admitted that there was no detailed analysis by which the rate is decided. The coffee they serve in the UK is purchased from the Swiss subsidiary, which charges a 20% markup on the wholesale price and pays 12% corporation tax on profits. Coffee is not transported to Switzerland but the 30 people who work in the subsidiary assess coffee quality. Regarding Starbucks' frequent reports of loss in the UK, the CFO told the committee that Starbucks are "not at all pleased" about their financial performance in the UK. MPs replied that it "just doesn't ring true" that the business made a loss, pointing out that the head of the business had been promoted to a new post in the US and they consistently told shareholders that the business was profitable. In Ireland, Starbucks' subsidiary Ritea only paid €35,000 in tax between 2005 and 2011 and the subsidiary recorded losses in every year other than 2011. Ritea is owned by Netherlands-based Starbucks Coffee Emea. Their French and German subsidiaries make large losses because they are heavily in debt to the Dutch subsidiary, which charges them higher interest rates than the group pays to borrow. Reuters calculated that without paying interest on the loans and royalty fees, the French and German subsidiaries would have paid €3.4 million in tax. The Dutch subsidiary that royalties are paid to made a €507,000 profit in 2011 from revenues of €73 million, while the company that roasts coffee made a profit of €2 million in 2011 and paid tax of €870,000. Protesters, who were unimpressed by the company's offer to pay £20 million in tax over the next two years, staged demonstrations in December 2012 in affiliation with UK Uncut. In June 2014 the European Commission anti-trust regulator launched an investigation of the company's tax practices in the Netherlands, as part of a wider probe of multi-national companies' tax arrangements in various European countries. The investigation ended in October 2015, with the EC ordering Starbucks to pay up to €30 million in overdue taxes, which the EC regards as illegal state support for corporations. A pair of economists from the KU Leuven noted that the Commission did not forbid Starbucks's tax construction as such, pretending that Starbucks is a Dutch company and effectively rewarding the Dutch state for its lenient tax policy. Chinese windfall controversy: In October 2013, China Central Television reported about the windfall profit in Chinese Starbucks. The report compared the price of a tall (12 fl. oz., 354 mL) Latte in Beijing, Chicago, London, and Mumbai. It was found that Beijing stores charged the most while Mumbai stores charged the least. It was also found that a tall latte cost 4 Chinese yuan (approx. USD $0.67) to make, but it sold at 27 yuan (approx. USD $4.50), creating a windfall profit for Starbucks in China from the higher margins. #Racetogether marketing campaign: On Monday, March 16, 2015, Starbucks launched a marketing campaign to promote conversations about race between customers and employees. This marketing campaign also called for baristas to draw the race together hashtag on customers' cups - similar to how Starbucks is already known for drawing customers' names on each cup. It was characterised as a "fiasco" by some media outlets, to the extent that Starbucks' vice president of public relations deleted his Twitter account. On March 22, Starbucks CEO advised his employees there is no longer a need to write #racetogether on cups. Reuters reported that "Starbucks said the phase of the campaign that involved messages on drink cups was always scheduled to end Sunday."