Starbucks employees to receive 60% bonus amid firm’s worst year since 2020

The coffee giant’s poor performance in the fiscal year, which ended on September 29, cut into the overall bonus for employees who met their personal goals, a source familiar with the matter said.

Bonuses for most employees are determined based on both individual performance and company results, with the latter calculated from revenue and operating income, a separate document shows.

They are typically paid in December and, in the U.S., range from 5% of base pay for non-managerial employees to 45% for senior vice presidents.

The reduced bonuses reflect the challenges Starbucks has faced this year as consumers, hit by widespread inflation, scaled back on their lattes.

Its quarterly and yearly performances, reported late last month, show disappointing sales in its two largest markets, the U.S. and China, which fell short of analysts’ expectations.

For the third consecutive quarter, Starbucks saw a decline in same-store sales, with a 7% drop this quarter—the steepest since the Covid-19 pandemic, according to CNBC.

Net income attributable to the company for the fourth quarter was US$909.3 million, or 80 cents per share, down from $1.22 billion, or $1.06 per share, a year earlier. Net sales also decreased by 3% year-on-year to $9.07 billion.

This was Starbucks’ first quarter under new CEO Brian Niccol, who joined the company in September to turn the business around.

“It is clear we need to change our strategy to win back customers fundamentally,” he said in the report. “We have a clear plan and are moving quickly to return Starbucks to growth.”

For the full fiscal year, global comparable store sales dropped by 2%, largely due to a 4% decline in comparable transactions, as shown in the firm’s report.

This marked the second drop in the last 15 years, with the first occurring in 2020 due to Covid-19 restrictions.