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In fact, CEO implies it could make the company’s brand more powerful

Tim Nelson
May 01, 2018

Last month, Starbucks wound up in hot water for a racially-charged incident where two black men were arrested for trespassing. Witnesses say the manager of the Philadelphia location called the police with no warning or provocation from the men, who were in the coffee shop waiting for a meeting to start. With the eight-minute clip making the rounds on social media, the incident of racial bias had the makings of a full-blown PR crisis for the Seattle-based global coffee chain.

But to hear the suits tell it on the company’s quarterly earnings call last week, the shameful event hasn’t had much of an impact on the bottom line. Despite any boycott efforts, CEO Kevin Johnson told investors that “we are not seeing an impact on [same-store] sales as a result of Philadelphia.” In fact, Johnson said that Q2 of the 2018 fiscal year was “another quarter of record financial results for Starbucks,” as the company netted $6 billion in revenue. That’s a 14% increase from Q2 of the 2017 fiscal year, thanks in part to chinese expansion and digital marketing efforts.

If anything, Johnson seems to believe that the company’s actions to address the incident could ultimately bolster the Starbucks brand. All 8,000 Starbucks locations will be closed on the afternoon of May 29 so that staff can undergo racial bias education, which the CEO described as “a day of discovery” before noting that “our approach to this will pay long term dividends to Starbucks.”

What transpired at that Starbucks in Philadelphia a few weeks ago was a shameful—and all too common—incident. Yet as cynical as it sounds, Johnson is probably right: even the loudest and most righteous calls for a full-scale boycott (especially after racial bias training) to bring down a company so enmeshed in the daily lives of its customers that they have their own rewards credit card. Still, it can’t hurt to try that local coffee shop next time you need your caffeine fix instead.

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