Starbucks will give all salaried workers the same 2% raise

Starbucks Corp. will give all salaried employees in North America a 2% raise this year as the coffee chain looks to pull off a high-stakes turnaround and manage expenses.

The uniform increase is a shift from past years, when raises were awarded at managers’ discretion. Starbucks is working on a turnaround effort that includes better service, shorter wait times and more inviting stores. In tandem, the company has asked executives to keep costs under control to help pay for these upgrades.

Customers and workers say they “can see and feel the differences these investments are making,” according to Starbucks. “As we make these significant investments, we need to carefully manage all our other costs.”

That involves “taking a consistent approach to merit increases across all teams” for the fiscal year that ends in late September, according to the company. The 2% raise applies to all corporate staff, as well as to workers in manufacturing and distribution. It also includes retail leadership such as store managers who, unlike baristas, are salaried.

Starbucks is looking to reverse six quarters of same-store sales declines. In addition to making cafes more welcoming, Chief Executive Officer Brian Niccol has begun work to refresh the menu – including by cutting sugar – while adding more staff to stores and rolling out technology to streamline orders.

The company granted some executives stock grants with a $6 million target value each, which are payable if they keep a lid on costs while delivering on the turnaround as quickly as possible.

Starbucks has urged workers to get on board with the plans, even recruiting former CEO Howard Schultz to address corporate workers after the company posted its latest sales decline. Schultz also spoke to a gathering of 14,000 staff, mostly store managers, in June.

Niccol has so far implemented a raft of workforce changes, from tightening the dress code for baristas to laying off 1,100 corporate workers and requiring some to relocate to Seattle.

In its current quarter, Starbucks is expected to post a slight increase in comparable-store sales, which measures performance at locations open at least 13 months, according to the average estimate of analysts polled by Bloomberg.

In Starbucks’ previous fiscal year, corporate workers only received 60% of their bonuses due to the company’s poor financial performance. Barista raises were capped at about 3%, a lower top rate than the previous year.

Starbucks shares were little changed at 9:45 a.m. in New York trading. The stock rose 1.4% this year through Monday’s close, versus a gain of 9.7% for the S&P 500 Index.