Starbucks 4-Hour Diversity Fix Cost Very Little
- Starbucks’ anti-bias training session may only cost the company $12M
- Shares of Starbucks are up 80% over the past five years
When coffee conglomerate Starbucks (SBUX +0.28%) decided to tackle diversity and close 8,000 stores, it marked the second time the company shut down for an entire afternoon. What’s the real cost of attempting to fix diversity in half a work day?
Why This Matters: Just how much was Starbucks really willing to risk for its diversity training, it seems like not much. Mornings provide the coffee chain with the majority of its sales so they went with an afternoon anti-bias training session. If we go back 10 years ago Starbucks closed its stores to retrain baristas on how to make espresso and steam milk. At the time this closure cost the company $6 million in lost revenue.
When the company shut its doors for four hours in May to impart diversity knowledge on employees the lost revenue number possibly doubled. Jeff Sonnenfeld, senior associate dean for leadership studies at Yale told CNBC he expected the closure to cost the company about $12 million. Starbucks makes around $22 billion a year which comes out to $60 million a day, meaning they could lose about 20% of their daily revenue, according to MarketWatch. For a company that’s worth $78 billion this is a small drop in the bucket for them.
Since the arrest of two black men at a Philadelphia Starbucks in April the company’s stock is down around 4%. While consumer sentiment has dipped slightly over the last few days, the company's stock remains stable and is up 80% over the past five years.
What’s Next: The actual costs of the financial hit Starbucks experienced from the half day closure won’t actually be seen until the third quarter. Look out to see where the miniscule revenue loss number comes in at when the company reports on July 26.
CBx Vibe: “I’m Upset” Drake